Marks & Spencer was the fifth most highly-valued public company in Europe by 1982.

Part I of this history of Marks & Spencer can be read here.

Growth of the business
Marks & Spencer was the largest clothing retailer in the world by 1966, with a ten percent share of the British clothing market.

Marks & Spencer overtook Woolworth as the leading retailer in both sales and profits in Britain in 1968. The company was one of the largest in Britain, with a market value of £615 million in 1970.

Marks & Spencer employed 37,094 people in 1972, placing it just outside the top 50 employers in Britain. The retailer was the fourth largest public company in Britain, with a market capitalisation of £856 million.

Marks & Spencer began to sell frozen food from 1972. Convenience food was being sold at 100 stores by 1973.

Marks & Spencer expands overseas
Marks & Spencer had saturated the British mid-market clothing sector by the early 1970s, and began to look overseas for further growth. The company acquired a 50 percent stake in three Canadian clothing retailers in 1973. A controlling interest was acquired three years later.

In order to increase margins the company began to sell luxury items in its British stores.

Marks & Spencer was the second largest retailer in the world by 1974.

A branch was opened in Paris in 1975. The store ranked among the company’s top ten worldwide in terms of sales and profitability by the mid-1990s.

Marks & Spencer developed a reputation for treating its staff well, and employee absenteeism rated at just three percent in 1976.

Marks & Spencer was the fourth largest British public company in 1979, with a market capitalisation of £1.5 billion.

Marks & Spencer claimed one seventh of the British clothing market by 1980. It was the fifth largest food retailer.

Marks & Spencer had the fifth-largest public company in Europe by 1982, with a market capitalisation of US$3.7 billion and annual sales of just under £2.2 billion.

Marks & Spencer was considered one of the best-managed companies in the world throughout the 1970s and 1980s.

The first non-family member was appointed as chairman and chief executive in 1984.

Marks & Spencer was the 93rd most valuable public company in the world in 1986, with a market capitalisation of $8.3 billion.

The first location outside a town centre was opened in Gateshead in 1986.

Marks & Spencer made two United States acquisitions in 1988; Brooks Brothers, the clothing retailer, and Kings Supermarkets of New Jersey. It was widely suggested that Marks & Spencers overpaid for the 47-strong Brooks Brothers, which it acquired for $750 million, which at the time represented the highest price ever paid for a US retail chain. Forbes commented on the purchase cost, “a lot of people nearly burst from laughing”.

Marks & Spencer operated 275 stores in Canada and eight stores in France by 1990. That year the company opened its first store in Spain.

Marks & Spencer was the 63rd largest public company in the world by 1992, as measured by market value. The company employed 55,750 people, and was the twentieth-largest private employer in Britain.

The Canadian venture had been unprofitable in all but three of its twenty years by 1993. Brooks Brothers continually underperformed.

Marks & Spencer was the only retailer in the world with a AAA credit rating in 1994. The business had a reputation for quality and value for money. It boasted a turnover of over £5 billion and 679 stores.

Marks & Spencer held a 17 percent share of the British clothing market by 1996, and five percent of the food market.

Subsequent troubles
Marks & Spencer reported a sudden slump in profit in 1998. Senior management was regarded as complacent. Excessive margins had eroded customer loyalty. Competition had increased from the likes of GAP, Next and Zara.

The company withdrew from the Canadian market in 1999.

Marks & Spencer announced a radical restructuring of its operations in 2001. The British business was revamped and its United States retail operations and company-owned stores in Europe were divested. Brooks Brothers was sold for $225 million, less than a third of what M&S paid for it thirteen years previously.

Marks & Spencer was relegated from the FTSE 100 in September 2019.

This is the story of how Marks & Spencer became one of the largest retailers in Britain.

Michael Marks establishes the business
Michael Marks, a Russian-Jewish immigrant, established a “Penny Bazaar” in the Kirkgate open market in Leeds, Yorkshire in 1884. Marks sold haberdashery goods, and no item cost more than one penny.

Marks soon opened a stall at the covered market in Leeds, which was open seven days a week. Outlets were then established in the booming cotton towns, such as Warrington, Birkenhead and Wigan.

The steady expansion of the business saw Marks recruit Thomas Spencer, a cashier, as a partner in 1894. There were 12 shops and 24 stalls in covered markets by 1901.

Spencer retired in 1903, and Marks & Spencer was registered as a limited liability company.

Simon Marks revolutionises the business
By the time Michael Marks died in 1907 there were over 60 retail outlets. He was succeeded as head of the company by his son, Simon Marks (1888 – 1964).

Simon Marks noted the rapid growth of the low-price Woolworth chain in Britain during the 1920s. He travelled to the United States in 1924 in order to discover the secrets behind its rival’s success.

Open his return to Britain Marks decided to cut out the middleman, and deal directly with manufacturers. On the basis that it was the merchant rather than the manufacturer who knew the customer best, Marks & Spencer would design its own clothing and goods, and then find a contractor who could produce to the specifications and cost.

Simon Marks declared that his ethos was to give everyone, “a little bit of luxury, to make a factory girl look like a debutante”.

The penny pricing system had ended during the First World War, but a new five shilling price-ceiling was introduced from 1924.

Marks & Spencer had 125 stores by 1926, and the business was floated on the stock exchange in order to fund further expansion. That year, Marks was joined by his brother-in-law, Israel Sieff, as joint-managing director.

Marks & Spencer employed 11,555 people by 1935, and ranked as the 55th largest employer in Britain.

Opening new stores, and the redevelopment of existing stores, allowed Marks to reposition the business from a working class market to a classless one. Repositioning meant that Woolworth was no longer a competitor by the mid-1930s. Symbolically, a state-of-the-art outlet was opened on Oxford Street, London, in 1938.

Marks & Spencer began to concentrate on clothing, which accounted for two thirds of sales by the 1930s. 80 percent of sales were in clothing by 1938, with the remainder in food. The business had built a niche in-between the value shops and the department stores. Marks & Spencer was able to boast that 92 percent of its goods were manufactured in Britain by 1939.

The Second World War resulted in the abandonment of the price-ceiling principle.

Marks & Spencer held a five percent share of the clothing market in Britain by 1950.

Marks & Spencer employed 28,403 people in 1955.

Simon Marks continued to revolutionise the business. He removed unnecessary bureaucracy by ending inventory tracking in 1957. Marks reduced overheads and passed on the savings to the customer. Any item of clothing could be returned without a receipt provided it bore the company’s trademark.

The Marble Arch outlet in London made for money per square foot of retail space than any other store in the world by 1961.

Marks & Spencer was the fifth most highly-valued public company in Britain by 1963, with a market value of £435 million.

Simon Marks died in 1964. His obituary in The Times described him as “one of the great formative influences in the social and economic life of England during the past generation”.

Click here for Part II of this history.