Marks & Spencer - History

History

The company was founded by a partnership between Michael Marks, a Polish Jew from Slonim, Poland (now in Belarus), and Thomas Spencer, a cashier from Yorkshire. On his arrival in England, Marks worked for a company in Leeds, called Barran, which employed refugees (see Sir John Barran, 1st Baronet). In 1884 he met Isaac Jowitt Dewhirst whilst looking for work. Dewhirst lent Marks £5 which he used to establish his Penny Bazaar on Kirkgate Market, in Leeds. Dewhirst also taught him a little English. Dewhirst's cashier was Tom Spencer, an excellent book-keeper; he acquired a lively and intelligent second wife, Agnes, who helped improve Marks's English. In 1894, when Marks acquired a permanent stall in Leeds' covered market, he invited Spencer to become his partner.

The next few years saw Michael Marks and Tom Spencer open market stalls in many locations around the North West of England and moved the original Leeds Penny Bazaar to 20, Cheetham Hill Road, Manchester.

Marks and Spencer, known colloquially as "Marks and Sparks", or "M&S", made its reputation in the early 20th century on a policy of only selling British-made goods (a policy discontinued in 2002). It entered into long term relationships with British manufacturers, and sold clothes and food under the "St Michael" brand, that was introduced 1928. The St Michael honours Michael Marks. It also accepted the return of unwanted items, giving a full cash refund if the receipt was shown, no matter how long ago the product was purchased, which was unusual for the time. It adopted a 90-day returns policy in 2005 and on 12 April 2009 the refund policy changed once again to 35 days.

M&S staff raised £5,000 to pay for a Spitfire fighter called The Marksman in 1941.

By 1950, virtually all goods were sold under the "St Michael" label. M&S lingerie, women's clothes and girls' school uniform were branded under the "St Margaret" label until the whole range of general merchandise became St Michael. Simon Marks, son of Michael Marks, died in 1964, after fifty-six years' service. Israel Sieff took over as Chairman and in 1968, John Salisse became the company Director. A cautious international expansion began with the introduction of Asian food in 1974. M&S opened stores in continental Europe in 1975 and in Ireland four years later.

The company put its main emphasis on quality, including a 1957 stocking size measuring system. For most of its history it also had a reputation for offering fair value for money. When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of 'British Quality Goods'.

The uncompromising attitude towards customer relations was summarised by the 1953 slogan: "The customer is always and completely right!".

Energy efficiency was improved by the addition of thermostatically controlled refrigerators in 1963.

M&S has sold Christmas cakes and Christmas puddings since 1958. In an effort to improve the quality of their Swiss rolls, they hired the food expert Nat Goldberg, who made a major improvement across their entire cake range, which had lost the public's favour a few years earlier. As a later measure to improve food quality food labelling was improved and "sell by dates" were phased in between 1970 and 1972.

Smoking was banned from all M&S shops in 1959 because of the fire hazards it posed. It later became a permanent rule after concerns were raised by asthmatics about their health.

All international shops are operated under franchise, with the exception of those in the Republic of Ireland and Hong Kong which remain in company ownership.

The first M&S shop in central Asia was built in Kabul in the 1960s but was later shut down.

M&S expanded into Canada in 1973, and at one point had forty seven stores across Canada. Despite various efforts to improve its image, the chain was never able to move beyond its reputation there as a stodgy retailer, one that catered primarily to senior citizens and expatriate Britons. The shops in Canada were smaller than British outlets, and did not carry the same selection. In the late 1990s, further efforts were made to modernise them and also expand the customer base. Unprofitable locations were closed. Nonetheless, the Canadian operations continued to lose money, and the last 38 shops in Canada were closed in 1999.

Expansion into France began with shops opening in Paris at Boulevard Haussmann and Lyon in 1975, followed by a second Paris shop at Rosny 2 in 1977. Further expansion into other French and Belgian cities followed into the 1980s. Although the Paris shops remained popular and profitable, the whole of the Western European operation did not fare as well and eighteen shops were sold in 2001. However in April 2011, M&S has changed directions again with an announcement to reopen a store that will not only sell clothing but food as well. In addition the group will also open several food outlets throughout the French capital. The first branch opened on 24 November 2011 at the Champs-Élysées in a ceremony attended by company CEO Marc Bolland, model Rosie Huntington-Whiteley and British Ambassador to France, Sir Peter Westmacott. The Daily Mail reported that 1,000 customers queued outside for over 2 hours at the opening of the 1,400 sq metre store.

In 1988, the company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain. They were subsequently sold off, in 2001 and 2006 respectively.

M&S's profits peaked in financial year 1997/1998. At the time it was seen as a continuing success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure as head of the company, profit margins were pushed to untenable levels, and the loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also a burden, as rival retailers increasingly imported their goods from low-cost countries, but M&S's belated switch to overseas suppliers undermined a core part of its appeal to the public. Another factor was the company's refusal until 2001 to accept any credit cards except its own chargecard.

These factors combined to plunge M&S into a sudden slump, which took the company, its shareholders, who included hundreds of thousands of small investors, and nearly all retail analysts and business journalists, by surprise. The company's share price fell by more than two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145 million in the year ended 31 March 2001.

Marks & Spencer launched an online shopping service in 1999.

In 2001, with changes in its business focus such as accepting credit cards, the introduction of the "Per Una" clothing range designed by George Davies, accompanied by a redesign of its underlying business model, profits recovered somewhat and M&S recovered some of its market share, but it was soon evident that problems remained.

In 2004, M&S was in the throes of an attempted takeover by Arcadia Group & BHS boss, Philip Green. On 12 July a recovery plan was announced which would involve selling off the financial services business to HSBC Bank plc, buying control of the Per Una range, closing the Gateshead Lifestore and stopping the expansion of its Simply Food line of shops. Philip Green withdrew his takeover bid after failing to get sufficient backing from shareholders.

In February 2007, M&S announced the opening of the world's largest M&S shop outside the UK at Dubai Festival City.

On 2 October 2008, M&S opened its first mainland China shop in Shanghai. Problems with the supply chain for the first few months of opening led Stuart Rose, M&S chairman, to describe failures in "basic shopkeeping".