Marks & Spencer fashions new sales strategy in China

A Marks & Spencer store in Shanghai. CHINA DAILY

Emphasis to shift from Shanghai to Beijing and Guangzhou

British leading retailer Marks & Spencer Group Plc is revamping its China operations to boost flat sales, a plan that means closing two to five stores in Shanghai while opening new stores in Beijing and Guangzhou and enhancing e-commerce operations on leading retail website Tmall.

"We continue to review the shape of our existing store portfolio and may relocate a couple of our existing supporting stores in the Shanghai and surrounding area to open our new flagship stores in cities like Beijing and Guangzhou," the company said on Tuesday in response to queries from China Daily.

"We expect this to be around two to five store relocations, but our ambition is to still have 15 owned stores complemented by stores with our local partner and an online presence."

The retailer entered the Chinese market in 2008.

On April 1 at an analysts seminar in Paris, the retailer unveiled international plans that include 250 new stores, an expansion of its food business and an increase in its franchise operations.

M&S said that over the next three years, it will concentrate on growing international revenue by 25 percent and international profits by 40 percent.

Its growth plan for the Chinese market includes focusing on its existing owned flagship and central stores in Shanghai and entering new cities including Beijing and Guangzhou with directly operated flagship stores.

Stephen Rayfield, who is M&S' managing director for China, said the flagship stores at Golden Bell and West Nanjing Road continue to perform well, and the company believes there is an opportunity to enter new cities such as Beijing and Guangzhou.

"At the new flagships, customers will be able to shop our extensive range of quality fashion and food," said Rayfield. At present, the retailer has seven stores in Shanghai, two in Changzhou and one store in each of Ningbo, Wuhan, Qingdao, Jiangyin, Wenzhou and Suzhou.

In 2013, it launched a virtual store on Tmall where it sells apparel and accessories. It also expanded its food category on the Tmall store.

The retailer also is looking to work with a local partner to drive further growth in the country. Rayfield said a strong local partner with excellent local experience and expertise will accelerate growth across China.

Jason Yu, general manager of Kantar Worldpanel, said the British retailer-with major business in China-has challenges in luring more visitors to its stores in Shanghai as a result of a vague market position, which is sandwiched between high-end luxury brands and rapidly expanding fast fashion brands.

"Marks & Spencer's lacks a high-end image in China among consumers, yet it is not responding as quickly to customers as are fast fashion brands," he said.

The retailer said its clothing positioning in China is to offer "exceptional quality and confident style", and it improved its size ratio based on customers' needs in China and applied Chinese sizing information to some products.

Group pre-tax profit last year fell 14.2 percent to 564.3 million pounds ($943 million).