Blow to high street
M&S blames council policies for exiting town centres
Marks & Spencer has blamed “failed local authority or government policy” after confirming a “pipeline” of further store relocations away from town centres to retail parks.
The company said town centres have “lost impetus” and it is quitting multi-floor buildings with poor access and car parking in order to meet the demands of modern consumers.
It will shut a further 32 stores in addition to 68 full-line outlets and 19 smaller food shops that have already closed, including its store in Sauchiehall Street, Glasgow.
The relocation strategy will be seen as a huge setback to town centre policy makers as well as to landlords and property agents seeking new tenants in large format buildings. It sends a strong signal to councils which are pursuing plans to deny motorists access to town centres.
M&S said it is creating a bigger food store format which can serve more of the family shop and offer click-and-collect services for Clothing & Home, and opened 13 more efficient full-line stores.
“We are now developing a growing pipeline of store relocations, moving from old multi-floor buildings, often with challenged fabric and poor access and car parking, to modern, well-located sites wherever possible in the renewal format with omni-channel capability,” it said.
“Moving away from town centres is not our only focus, but we recognise that in an omni-channel world, ease of shopping and fast access is critical to competitiveness, and in many cases we believe the town centre locations have lost impetus as a result of failed local authority or government policy. As a result, a high proportion, but not all, of our relocations are to the edge of town.”
The company is also reducing its Clothing & Home space, reflecting the rapid growth of online and its “exit from the long tail of low sales density stores that deliver a small proportion of total profit”.
The full-line store pipeline already has around 15 new stores planned over the next three years, including seven former Debenhams sites, and the company expects this to build further.
M&S anticipates opening c.40 new food stores in the next three years, largely in the 12,000-15,000 sq ft renewal format. These stores generate higher productivity and good cash paybacks.
Of the 10 M&S stores opened in 2020/21 sales are averaging c.11% above plan, with paybacks of around 1.5 years.
The company said annual profits rose by almost a third but said it will take a £31 million charge from its exit from Russia.
Pre-tax profits came in at £522.9m for the year 2 April – up 29.7% on the previous year. Profits are unlikely to rise this year as the retail sector feels the effects of the cost-of-living crunch.
The retail giant stopped shipments to Russia in March but previously said complex franchise deals prevented it from withdrawing completely, with about 50 shops still open. It now says it will fully exit the Russian market following the invasion of Ukraine.