Steve Rowe, CEO of M&S, on why digital retail is about more than ecommerce

Interview

Steve Rowe
CEO of Marks and Spencer

For Marks & Spencer, becoming a truly digital retailer is about more than ecommerce. “It means becoming omnichannel, and that is where M&S will win,” says CEO Steve Rowe, speaking to PwC for our 24th Annual CEO Survey.

“The consumer wants to shop any time, any place, anywhere. The job of retailers is to fulfil it how they want, when they want it, at the right price and give them a great service.”

The pandemic has caused M&S to accelerate its transformation programme under the slogan ‘never the same again’, which refers to permanent changes in customer behaviour. Implicit in that message is that M&S must drop old ways of working to become a more agile, digital business.

Changing customer behaviours

In some cases, COVID-19 has accelerated customer trends. M&S has seen a big rise in online sales, fuelled in part by its online food partnership with Ocado, which launched in September 2020.

Similarly, there has been a gradual consumer shift from formal office wear in recent years, but remote working has caused a dramatic change in the clothing people buy.

“Throughout my career I have religiously worn blue suits with a white shirt. This year I have put a suit on twice,” says Steve. 

The rise in customers working from home has seen slipper sales at M&S go up 120% year-on-year, while leisurewear is up 115%. “But we can’t sell a suit. They are down 80%,” he says.

Increased working from home has also impacted M&S’s city centre stores, many of which rely on commuter traffic. M&S’s busiest food store is in London’s Waterloo station, but it has been closed or at 50% capacity for much of the past year. 

“Will we sell fewer sandwiches overall? I think we will. But we are currently selling more raw food as people cook more often at home,” says Steve. “But it will question the viability of some locations.”

Retail estates

M&S’s transformation involves a long-term programme of reshaping its estate, as shoppers look for more convenient locations away from the high street. In the past four years it has closed nearly 70 stores and is continuing to evaluate its store formats.

Steve says M&S will roll out more large food stores after success in attracting family shoppers, but there remains work to be done on defining its clothing and home store experience.

“We need to get the environment right so people will want to come out. They want to visit somewhere that is welcoming and fun,” he says. “You can’t just line up racks of clothes. They can get racks of clothes online.”

The need to rethink store estates is a trend impacting the wider retail industry. It has been brought into sharper focus following the collapse of Debenhams and Arcadia Group.

Both brands have been bought by pureplay online retailers, with their store estates left empty.

“There is no obvious solution to fill some of those vacancies. These are not small footprints. They require huge changes to either planning permission or construction, and you cannot do that at this scale without intervention from the government,” says Steve.

An omnichannel retail experience

Steve says the next stage of developing M&S's omnichannel strategy in-store is to use new technologies such as AI and robotics, to improve customer experience and make employees more efficient and productive. M&S has begun trialling digital tools in 10 stores, but the experience is not yet ready to be rolled out at scale.

“We need to get the environment right so people will want to come out. They want to visit somewhere that is welcoming and fun,” he says. “You can’t just line up racks of clothes. They can get racks of clothes online.”

Customer data is also fundamental to M&S’s omnichannel strategy. Steve says his team recently combined the data on more than 20 million customers across five channels, including information on 1,500 customer attributes.  

“That knowledge will allow us to make really good decisions,” says Steve.

While data collection is a huge opportunity for retailers, it also requires considerable investment to mitigate data privacy risks. As with many CEOs, Steve says cyber security is at the top of his agenda, because “one event can be catastrophic.”

“Our customers give us their data because they trust us. If we lose that, the long-term damage to a brand like M&S is irreparable,” he says.

Workforce wellbeing

Ultimately, technology can only do so much to improve the in-store experience. “We want a digital business in places where it makes sense to be digital, not just for the sake of it,” says Steve. He gives the example of bra fitting being a differentiator for M&S. “I believe the best way to do that is a combination of digital tools and good old fashioned tape measure and fit.”

It’s for this reason Steve puts so much emphasis on the wellbeing of his employees. M&S placed 27,000 people on furlough in 2020, but all were paid in full and even received a bonus at the end of the year. However, the retailer also made 8,000 redundancies.

Everyone returning to work in-store will be given an induction so they are confident about working with the public, as Steve recognises the pandemic has impacted people in different ways.

"We all have to be clear about our mental health and recognise the signs when we or others are struggling," he says. "As employers we can provide the right support for that, whether call centres or colleague forums."

By focusing on wellbeing, M&S has achieved record-high levels of employee engagement. Steve says people have also responded well to his decision to delegate more autonomy to those with specific expertise, while making the organisation more agile by reducing the number of people involved in critical business decisions.

This combination of engaged, motivated employees and a convenient, tech-enabled customer experience is what underpins Steve’s strategy for M&S as it seeks to recover from the pandemic.

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Marco Amitrano

Marco Amitrano

Head of Clients and Markets, PwC United Kingdom

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