M&S is undertaking a strategic move to reduce prices in its international stores to enhance competitiveness and growth.
- CEO Stuart Machin aims to address price disparities by aligning international store prices more closely with market standards.
- Increased costs due to franchise partner arrangements are a key factor in higher international pricing.
- The company plans to rework its franchise agreements to balance risks and encourage a wider product range.
- Potential innovations include new product trials overseas and faster stock delivery.
M&S is set to initiate a price reduction strategy in its overseas outlets in an effort to revive its international market performance. This move comes after CEO Stuart Machin highlighted significant price discrepancies between M&S stores abroad and local competitors, notably citing a Singapore outlet that costs about a third more than its competitors.
Machin identified that part of the problem lies in the dual margins set by M&S and its franchise partners, which inflate product prices overseas. Addressing investors earlier this month, Machin acknowledged the lack of a mutually beneficial partnership with franchise partners, acknowledging that adjustments are imperative to restore competitiveness.
Franchise partners, facing more risk, are limited to purchasing only basic, sure-sell products, leading to a restricted and repetitive product range at international stores. Machin stated, “That is why when you go to many of our stores internationally, you’ll see the same everyday range, year in, year out.” This reliance on safe products limits innovation and variety available to international customers.
The company plans to renegotiate franchise agreements, with the goal of establishing a more balanced risk distribution. This would encourage franchise partners to diversify their offerings and invest in a broader range of products.
To further stimulate international growth, M&S is considering experimenting with new product introductions in foreign markets and streamlining the process of stock distribution to these locations.
Currently operating 434 international stores, with 264 managed by franchise partners across Asia, the Middle East, and Europe, M&S aims to make these changes to strengthen its global presence. Earlier this year, Mark Lemming was promoted to managing director of international to lead these efforts.
M&S’s strategic price cuts overseas aim to enhance competitiveness and drive growth in its international ventures.
