Marks & Spencer is planning to slow its overseas expansion in light of economic turbulence in its target markets.
Due to economic issues in Russia and China, M&S has chosen to alter the strategy it set in 2014, which named these two countries, amongst others, as areas of focus for international expansion.
Executive Director of M&S Patrick Bousquet-Chavanne explained to Reuters that the British retailer is re-thinking the pace of its growth for the immediate future.
“The world has shifted, is a different place… The Syrian situation was very different from what it is today… Putin had not invaded Ukraine and China was growing at close to 9%… it’s reasonable in that context that you would expect a different outlook on the next three years for the company.”
China’s economy has suffered setbacks recently, with many retailers having to reassess their position there in the wake of ‘Black Monday’. M&S has expressed caution in its plans for China in the past, having shown particular concern for avoiding the mistakes made by supermarket giant Tesco.
“The sectors in which we trade are not luxury, so we haven’t seen the dramatic slowdown as some might have. But we have seen some softness in the numbers,” Bousquet-Chavanne continued. “We’re going to have to be much clearer in terms of when you look at the roll-out or road map about where to open stores.”
M&S’s China strategy has already seen alterations this year: the company announced in March that it would close five stores in the greater Shanghai area in order to focus on flagship stores in larger cities and its online presence, whilst also growing its food business in Hong Kong. This “bricks and clicks” strategy, which involves focusing on flagship stores in major cities, along with smaller foot outlets and standalone lingerie and beauty concepts backed by local websites, has been applied throughout the countries where M&S operates.
According to Bousquet-Chavanne, M&S is still planning to open a flagship store in Beijing in its 2015-16 financial year, but gave no substantiating comments.
The economic slowdown in Russia has led to a similarly prudent outlook for any future expansion in the region.
“We’re looking at places which are very much ‘tier 1’… where you have an upper middle class consumer base… where we will do well even in the context of a slowdown in the economy.”