Challenged by leaner, nimbler rivals at home, Marks & Spencer bets on India

Britain's legacy brand pins its hopes on the Indian consumer in a joint venture with Reliance Industries

Think of it as the vicissitudes of running a global business. At the same time that UK-based retailer Marks & Spencer (M&S) decided to shutter down one of its oldest stores, located at Stockton-On-Tees in England, as part of a larger plan to close an additional hundred stores in the next four years, its subsidiary in India was launching a new lingerie store in Mumbai.

In India, M&S is in a joint venture with Reliance Industries and has been expanding at a steady clip, in terms of stores and revenues. The first M&S store came up in India in 2001 and the company tied up with Reliance Retail in April 2008. When asked about the retreat that the company was beating in the UK, James Munson, managing director for Marks & Spencer India said that “problems facing the UK business are unique to that market and the store closure programme currently being undertaken is solely concentrated in the UK and in no ways impacts the Indian business.” On the contrary, Munson says that the India venture has seen sales revenue grow 9 per cent over the last year, leading the company to report Rs 9.85 billion in revenue for the fiscal year 2018. 

M&S, to some extent like Nestle’s Maggi, Suzuki, Reckit & Benckiser’s Dettol among others, has made India a home away from home. The brand’s footprint in the country has steadily grown even as it has had to pull back in other markets.

James Munson, Managing director, Marks & Spencer India

Munson says that despite being present in 57 different markets, India is their largest outside of the UK and the company is on course to grow the business further. M&S may be one of the largest international retailers in India with 68 stores across 32 cities, and 1,300 employees but it is not alone in seeing the country as a quick growth hot spot. Other international retailers like Decathlon of France have also ramped up significantly growing to as many as 60 stores with nine in Maharashtra alone. 

The ongoing plan for M&S in India is to further roll out around 15 stores in the next couple years, company officials add, saying that lingerie is an area they see fast growth in. The company says that its brassieres have found a huge market in the country; the company sold 86,000 units in the year (2016-17)  and 156,000 in 2017-18. Sales in the lingerie-only shops have risen by 40 per cent between 2015 and 2017, making what started as an experiment a clear market performer, according to Munson. 

But is an international brand with historical brand equity enough to go the distance in a market that’s complex, still evolving, and increasingly leaning on online sales and e-tail business? Devangshu Dutta, CEO of consulting firm Third Eyesight that not just for M&S but for many storied brands that are running out of steam, India’s large consumer market has the potential to serve as a strategic market for the future. “Certainly lingerie, where M&S has long had an authoritative stance, is a differentiator, but women’s wear overall has not been yet fully tapped by them,” Dutta says. “The trick is in positioning the retailer to be aspirational, with its international moorings, but also accessible,” he adds.

As far as M&S goes, its India model has sharper focus than in the UK. Overseas it is a retailer of food, apparel for men and women and a mix of house-wares while here the thrust is squarely on apparel and now lingerie. It has also paid close attention to affordability, and been careful with price bands, stock collections and entry-level offers. M&S officials indicate that as many as 65 per cent of their tops are priced under Rs 2,000 and apparel is tailored to specific geographies with attention to colour and fabric preferences in warmer states, for example. The firm has also taken stock of growing traffic for apparel online and is present on dotcom marketplaces such as Myntra and Jabong.

While it is important for brands to maintain consistency in their positioning, markets like India offer ample opportunity for experiments. Some international brands choose to maintain their global positioning, including prices, which puts them firmly in the premium or even luxury segment. Examples: Lacoste and Diesel which have stores on par with their global counterparts despite having smaller real estate and product selection for the subcontinent.

Others such as M&S aim to be relevant to a wider customer base. “This has meant developing products and price points exclusively for India, and sacrificing products which Indian customers who shop in the UK would expect, because demand for them is seen as inadequate in India,” Dutta says. Examples of those may include the premium food items that M&S sells. Ultimately, how M&S forges it’s brand equity here will depend on three pillars — how it customises to local demand, if it can best existing competition and finally, if the customer can see the difference.