Where should a retailer invest? Refurbishment or marketing?

by Nigel Hollis

After delivering my take on what is requires to revitalise a brand, one of my audience asked, where should a retailer invest? In refurbishing existing, older stores, or in marketing to reach new customers? Of course, ideally one would do both, but if you do not keep your existing customers happy their defection may undermine your growth prospects anyway.

This question was asked of me in Mexico, but it would be equally relevant in most countries as retailers struggle to reinvent themselves in a world of e-commerce. Iconic brands like Boots in the UK are in the process of revitalisation programs intended to make them more relevant to the needs of today’s shoppers. And while some brands like W.H. Smith may choose to rely on location to drive sales rather than customer experience, most recognise that the foundation for growth are satisfied customers.

The question brought to mind the example of the successful revitalization of M&S in the mid-2000s, when the brand’s core customers were abandoning the retailer and sales were on a downward trend. For a revival to be successful, the brand had to fix the fundamentals first. The stores had to be refurbished and service had to be improved, the product line-up had to be right and the clothes – a large part of the retailer’s sales – had to become more stylish and opening price points had to be lowered in-line with competition. All the hard work was done and M&S was ready to welcome back its shoppers.

But if people are no longer visiting your stores then it will take a long time for them to realise anything has changed unless you tell them. M&S had to invest in a compelling ad campaign to get people back into the stores. “Not just food, your M&S food” played to one of the brand’s key strengths and reminded people that they loved many of the food items the brand offered, while providing time for the clothing product to be improved.

When the time was right, a new ad was launched focusing on the must-win product area: women’s wear. The choice of 60s model Twiggy and today’s supermodels ensured broad relevance to the campaign while evoking a nostalgic response from older people while focusing attention on the new, more stylish product lines. Footfall increased over previous year by 6 percent and sales started to increase rather than decrease over the prior year. Against a backdrop of falling retail sales, M&S announced a fourth quarter increase in UK sales of 9.1 percent and the company’s share price increased by 50 percent.

So, was marketing important to the revitalization of M&S? Yes, it was, but only because the fundamental product issues had been fixed first. It is better to prevent customer defection before it starts by ensuring that your stores deliver a great shopping experience, particularly in these days of e-commerce, but failing that fixing the reason for defection needs to precede marketing to new customers.

Sadly, M&S once again finds itself on the back foot. This year it announced a profit decline of 10 percent and is in the process of another revitalisation. This, once again, sees the food department play a key role as the brand plays to its strengths and closes existing stores while opening new, food-only ones. A partnership with Ocado is intended to fulfil demand for home delivery.

So, what do you think? Can M&S pull off a second revitalisation?