Tag Archives: Marks & Spencer history

The rise and fall of Marks & Spencer (1955 – 2001)

Read part I of my history of M&S here.

Marks & Spencer employed 28,403 people in 1955.

M&S was the fifth most highly valued stock in Britain in 1963, at £435 million. This value had risen to £615 million by 1970. M&S overtook Woolworth as Britain’s leading retailer in terms of both sales and profits in 1968.

M&S employed 37,094 people in 1972, placing it just outside the top 50 employers in Britain. The company enjoyed a turnover of £360 million and employed capital worth £160 million in 1973.

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

M&S began to look overseas for growth from the early 1970s. The company acquired a 50 percent stake in three Canadian clothing retailers in 1973. A controlling interest was acquired three years later.

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

1982 sales were just under £2.2 billion. M&S, with a market capitalization of $3.7 billion, was the fifth highest valued public company in Europe by 1982.

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

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

The company made two American acquisitions, Brooks Brothers, the clothing retailer, and Kings Supermarkets in 1988. Brooks Brothers cost M&S $750 million, and included 47 stores.

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

M&S employed 55,750 people by 1992. It was the twentieth largest company employer in Britain.

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

Profits took a sudden slump in 1999. Excessive profit margins had eroded customer loyalty. The company withdrew from Canada that year.

M&S announced a radical restructuring of its operations in 2001. The UK business was revamped and its US 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.

The rise of Marks & Spencer (Part I)

Marks & Spencer is a British retail chain specialising in clothing and food.

Marks & Spencer’s origins date to 1884, when Michael Marks, a Russian-Jewish immigrant, set up a “Penny Bazaar” in the Kirkgate open market in Leeds, Yorkshire. Marks sold haberdashery goods, and no item cost more than one penny.

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

Marks & Spencer Penny Bazaar in Cardiff
Marks & Spencer Penny Bazaar in Cardiff

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

In 1903 Spencer retired, and Marks & Spencer became a limited liability company.  Marks died in 1907, and his son Simon took over the business, which now boasted over 60 retail outlets.

In the 1920s, Simon Marks noted the rapid growth of the low-price Woolworth chain. In 1924 he undertook a fact-finding mission to the US. What he learned there was to revolutionise the business.

Marks cut out the wholesaler, and decided to 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.

The First World War put an end to the penny pricing system, but in 1924 a new 5 shilling price-ceiling was introduced.

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

By 1935 Marks & Spencer employed 11,555 people, placing it as the 55th largest employer in Britain.

Opening new stores, and the redevelopment of existing stores, allowed Marks to reposition the company from a working class market to a classless one. By the mid 1930s, M&S had repositioned itself so that Woolworth was no longer a competitor. Symbolically, a state-of-the-art outlet was opened on Oxford Street, London, in 1938.

The company began to concentrate on clothing, which accounted for two thirds of sales by the 1930s. By 1938, 80 percent of sales were of clothing, and 20 percent were in food. The company began to position itself inbetween the value stores and the department stores. By 1939 the company was able to boast that 92 percent of its goods were manufactured in Britain.