Author: Ollie Jones, 06 February 2018

The M&S “14 store closure” announcement was greeted with trepidation in the press last week but FSP wanted to dig deeper and really understand the business logic to the decision, allied to the impact on customers.

M&S Store

It is clear that M&S has underlying structural problems with range, stock and online solutions but to close a store is still a major decision.  These stores either have very short leases and can be handed back to a landlord or are significant loss-makers. Looking at their proximity to other stores, we can however start to see a story here. The impending closures will result in a c.6% reduction in M&S’s department store count and some significant fixed cost savings, whilst FSP is able to estimate that the decrease in estate will lose coverage to only 2% of its potential consumers (1)

M&S Store Status

For customers the opposite is almost true. Whilst they will lose their very local store mostly located on their traditional high street, 70% of stores closing have an alternative M&S department store within 3 miles’ drive. This highlights the focus of closures for M&S’s strategy team; avoid customer marginalisation and ensure most customers impacted by the changes still have a relatively local store.

There are of course a few locations where people are effectively losing a convenient M&S store, such as Bridlington, Andover and Portsmouth. In these towns it is fair to assume all but the most loyal M&S shopper will desert the brand and spend their money elsewhere. Within Portsmouth, there will be a large number of the traditional M&S target customer without a store on their home island, exacerbated by the store in Fareham also being earmarked for closure. Subsequently, the next nearest stores at Whiteley Shopping Centre and Solent Retail Park can expect to capitalise on increased trade!

Portsmouth Provision

Winners benefitting from M&S’s store review are likely to be their direct competitors who can tempt disgruntled M&S consumers. Retailers including Next, Dunelm Mill, Argos, Matalan, The Range and Debenhams, particularly when located at Bridlington, Andover and Portsmouth, are likely to gain increased sales as M&S stores close their doors for the last time in these towns.

Retail Winners

 

(1) Source FSP: 5 mile buffer catchments

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