Iconic British retailer Marks & Spencer (M&S) recently opened the doors to its 16th store in Malaysia, cementing its already significant presence in the Southeast Asian market. Spanning 7,000 square feet, the store at Aeon Mall Tebrau City in Johor Bahru aims to redefine the shopping experience with its modern interior and diverse product offerings – from fashion to food. Operated by the Al-Futtaim Group, the new M&S outlet marks not just another milestone for the brand
brand in Malaysia, but also a notable addition to the retail landscape of Johor, one of the country’s fastest-growing cities Al-Futtaim has held the regional franchise rights for Marks & Spencer since 1997. Today, the franchise partnership boasts 46 stores located in Bahrain, Kuwait, Malaysia, Oman, Qatar, Singapore and the United Arab Emirates. How M&S has evolved While the latest store opening signals confidence in the region’s growth opportunities, M&S has had a somewhat shaky track record when it comes to international expansion in the Asia-Pacific market. In 2016, just after opening its 10th store in mainland China, M&S made a complete exit from the country. On the surface, China’s growing middle class should have been the perfect fit for a mass-market retailer like M&S. But a lack of investment in localising and translating the offering for the local market doomed the retailer’s prospects. Not only did M&S fail to adapt the fit of its clothing range to local consumers, it failed to win over the hearts and minds of the target market. In a market as vast and competitive as China, it is vital for brands to make a genuine connection. An ever-evolving market In 2017, M&S initiated talks with its long-established franchise partner Al-Futtaim, and ultimately named it the sole franchisee for M&S in Hong Kong and Macau. Established in the 1930s as a trading business, Al-Futtaim today is a diversified and progressive privately-held business headquartered in Dubai, United Arab Emirates. Structured into five operating divisions; automotive, financial services, real estate, retail, and health, and employing more than 42,000 employees in more than 20 countries in the Middle East, Asia, and Africa, Al-Futtaim partners with over 200 of the world’s most admired and innovative brands. In 2020, Al-Futtaim led the digital expansion of M&S in Malaysia, partnering with leading e-commerce platforms, such as Lazada and Zalora, as well as grocery and food delivery services Happy Fresh and Foodpanda, to offer home delivery services. The financials The company’s international expansion comes as the M&S brand is going from strength to strength. In August, the company reported group sales of £12 billion ($25 billion) for the 2023 financial year, an increase of 9.9 per cent from the previous year. While this is down from the 21.5 per cent increase in group sales in the 2022 financial year, it’s an uptick from the low single-digit growth rates the company saw prior to the pandemic. Group profit before tax in the 2023 financial year was £475.7 million ($989 million), which was also an increase of 21.4 per cent from the previous year. Group clothing and home sales were up by 11.5 per cent with store sales up by 14.9 per cent and online sales up by 4.8 per cent. There was a strong demand for click and collect services. International sales were up by 11.2 per cent at constant FX, to £1.06 billion ($2.21 billion), driven by a rebound in partner demand. International operating profit before adjusting items was £84.8 million ($174 million), a 15.2 per cent increase year on year. In terms of the outlook and guidance for the next year, M&S is predicting a good start to the 2024 financial year in both food and clothing and home, but given the uncertain outlook, market conditions are expected to become more challenging. The team expects modest growth in revenues driven by omnichannel growth and store rotation. The company has invested heavily in structural cost savings of over £150 million ($312 million), and believes this should mitigate sourcing cost pressures going forward.