Economic effect on Marks & spencer PLC
Since the 2008/09 recession, the UK economy has seen a slow recovery. The recession had affected the retail industry heavily with a decline in foot fall and ultimately a decline in profits.
1 year into the 3 year plan set in 2011, Marks and Spencer PLC reported a 1% drop in underlying profits to £705.9m for the year to 31 March and that a 30% cut in the top target had to be made. The reason cited for this was the failure of the economy to grow as predicted (The Guardian, 22 May 2012)
In 2014, Marks and Spencer were still experiencing the effects of the economy through customers shopping behaviour but as the UK economy improved, so did the customer confidence that a market recovery was a realistic possibility.
This increase in customer confidence has yet to be translated into a complete turnaround in consumer behaviour with people remaining cautious towards spending. (Marks and Spencer, Business report and financial statements 2014)
To combat the downtown, Marks and Spencer PLC has had to change the way they do business. Over the past 3 years, they have become more customer driven. They have repositioned the food business, becoming more specialist and they have also re-launched their clothing ranges, focusing quality and style. All this has made the company more attractive in a difficult market. Focus has also been placed on the online division of the business where lower operational costs (OPEX) can increase the profit margin.
(Marks and Spencer, Business report and financial statements 2014)