New Concept Stores for M&S

Hyper Island | MA Digital Management | May 2018

INTRODUCTION | PRESENTATION OUTLINE
Alexandra Schwartz | Business Transformation 2 | 31
The retail industry is bracing for major change, as the industry is about to experience a ‘perfect storm’ of change fueled by a
wide set of powerful technological, social, demographic, ecosystem, business, and economic forces. This report analyses the
current layers of the business environment affecting Marks & Spencer and proposes a new business model for the brand.
• Digital transformation is needed by organisations to meet rising
customer expectations, deliver scalable unique experiences, and
to respond to industry forces with increasing levels of agility.

• Especially the retail industry is predicted to change tremendously
in the years ahead, with a ‘perfect storm’ being predicted (Intel,
2017).
1. INTRODUCTION

2. THE CASE FOR CHANGE

3. A VISION FOR CHANGE

4. STRATEGY

5. SUMMARY

6. REFERENCES
Source: Intel, 2017

INTRODUCTION | ABOUT M&S
The M&S business model rests on selling its own products in their own stores and through their own website. On the one
hand this means that they are able to work closely with their suppliers on improving standards, but on the other hand this
model stops them from working with partners or selling through third-parties and affiliates, which is one reason why M&S food
does not have the option of home-delivery, as to date M&S has not been willing to partner with a service such as Ocado.
Figure 1: M&S Differentiators
Source: M&S, 2017
• Marks & Spencer (M&S) is a British multi-channel
retailer, with 766 UK stores and 454 international stores.

• The food business makes up 60% of the UK turnover
and the remaining 40% are made up of ‘general
merchandise’, referring to womenswear, menswear,
kids-wear, lingerie, beauty and home products, which
are sold in 343 full-line stores and online (M&S, 2018a).

• At the core of Marks & Spencer’s business model is
their purpose of ‘making every moment special’. In
the 2017 financial report, M&S self-identify their six key
differentiators, as can be seen in the outer circle of
figure 1.

INTRODUCTION | FINANCIAL PERFORMANCE
Profitbeforetaxes|£(millions)
0
150
300
450
600
Financial Year
2013 2014 2015 2016 2017
• M&S financial performance has been doing poorly since
the recession in 2008

• 2017 reported that M&S’s annual profits fell by 64% to
£176.4m (see figure 2), largely due to the cost of £437
million for a restructuring plan set forth by the CEO in
2017, explained more on the next slide (BBC, 2017).

• In the last two years, profits have been tumbling, largely
due to a fall in the clothing division of the organisation.

• M&S was once a company that made £1bn in profit in
2008. However, since 2012 they have had £890m
‘adjustments to reported profit’.
Figure 2: Annual Profits
Source: M&S, 2017

ABOUT M&S | RESTRUCTURING PLAN
• In reply to the failing performance of M&S, new CEO Steve Rowe
announced a transformation programme for M&S in November 2017.
• Initially the closure of 30 stores was announced, in order to cut 10% of
the shop ﬂoor devoted to the struggling clothing arm, putting nearly
500 jobs at risk (Wood, 2017).
• The organisation wanted to focus on further developing and growing
the food business.
However, since then the following measures have been announced by
the organisation:

• A slowdown in the Simply Food store opening programme
• An acceleration of the UK store closure programme (see image 1)
• The sale and franchise of its retail business in Hong Kong and
Macau
• The announcement of a new Technology Transformation
Programme
(M&S, 2017)
M&S has been very busy with a corporate restructure, but has business innovation been forgotten in the midst of the
restructure? While making tactical decisions on store closures and changing the strategic focus away from the failing clothes
unit to the food unit, the question arises whether M&S is forgetting to focus on consumer wants and identifying compelling
reasons for customers to shop at M&S. On the one hand a corporate strategy can give shareholders reassurances, but on the
other hand it seems that M&S is failing to compete on a business-level, to adapt to the increasingly high demands of today’s
consumer and to adopt a human-centred approach to business transformation.
Image 1: M&S Closures

INTRODUCTION | LAYERS OF BUSINESS ENVIRONMENT
Is there a good way to analyse the business environment? The need to model the business environment is crucial in
business strategy development as many scholars highlight (Andrews, 1987, Drucker, 1990 and Horton, 2010), however it is
also argued that it is often done badly (Fuld, 2003 and Schoemaker, 2008). Indeed, it can be argued that the layers of the
business environment model forces the complex business world to be categorised into only four basic levels, failing to
acknowledge the intricacies that connect cause and consequences.
The Organisation
Competitors
Markets
Industry
The macro-environment
• Despite not being able to predict the future reliably,
managers and entrepreneurs need to be aware of any
potential opportunities and threats.

• The layers of the environment that can affect a business
range from the macro-environment, the wider industry or
sector to competitors and finally the organisation itself.

• The business environment is what gives organisations
their means of survival and creates opportunities and
presents threats.

• Different models are used on the following slides to
evaluate the different layers of the current business
environment for Marks & Spencers (Johnson et al., 2014).

A PEST or PESTEL analysis is a common framework, if only one of many, that can be used to categorise macro-environmental
factors that may impact an organisation in the future (Johnson et al., 2014). In theory the PEST analysis can underline the
importance of external forces that can impact the organisation, however in practice these factors are often interconnected. Burt
et al. (2006) criticise the taxonomic nature of a PEST analysis, “because they are too generic, fail in delivering understanding of
the interrelationships and interdependences among variables, and do not produce a clear understanding of the (potential)
external drivers of change.” An example of the interconnectedness of these forces is the Brexit vote, which has impacted the
retail industry on political, economic and social levels. Therefore the only way to highlight the relationship between these effects
is the use of the EU flag in the below PEST analysis.
Political
Economic
Social Technological
THE CASE FOR CHANGE | MACRO TRENDS | PEST ANALYSIS
Inflation increased from 1.8% in early 2017 to 3% in
February 2018 (KPMG, 2016)
Higher import costs of goods lead to companies either
needing to absorb the costs or raise their prices (KPMG,
2016)
Increase in National Living Wage in April 2018 for 25+
to £7.83 per hour from £7.50 STLY (GOV.UK, 2018)
Weaker consumer spending, which has led to lower footfall
in shops (KPMG, 2016).
The UK population is growing and getting older with 18%
aged 65 and over and 2.4% aged 85 and over in 2017
(ONS, 2017).
Population is increasingly purchasing goods online and via
mobile devices and are becoming more lazy to purchase
items in actual stores
UK’s decision to leave the EU (Brexit) has impacted the retail
industry in various economic and social ways (see EU flag)
UK corporation tax rate cuts from 30% in 2005-06, to just 19
per cent in 2018, with plans to lower it to 17% by 2020 to
make the UK more attractive to businesses.
Repeal of the free movement act will make it more difficult
to hire low-skilled people in the supply chain or
warehouses (Willis Towers Watson, 2017).
Online retailers with mobile apps and payment options are
dominating the retail sector (business.com, 2017).
In-home services, delivery, and “chore” shopping will
become easier thanks to devices such as Amazon Alexa
(Deloitte, 2018).
Job automation from AI and robotics will affect more than
42% of all retail jobs, but it can also be beneficial to
consumers through lower prices (PwC, 2017).

THE CASE FOR CHANGE | INDUSTRY TRENDS
It is vital for all businesses to understand the trends within the wider industry or sector environment, including consumer
behaviour and a competitor analysis. Due to the rapid advancement of technology, it has become increasingly important to
consistently stay on top of the latest trends in order to spot potential opportunities and risks as early as possible.

An analysis of the industry environment is particularly important in determining profitability, as an industry where
competition and threat of entry is low, organisations can usually expect good profits. Amongst many models that can be
used, Porter’s Five Forces model is often cited in textbooks of business schools, however Grundy (2006) argues that
awareness and adaptability from practising managers are very limited.
An average of 11 stores opened on the British high
street every day in 2017, down from 12 per day in
2016, and 15 in 2013
An average of 16 high street stores closed every day
in 2017
Net loss of 1,772 stores from Great Britain’s high
streets in 2017
Source: PwC, 2017c
• CBI’s 2017 retail survey showed high street sales
were falling, as food inflation and uncertainty about
outlook of UK economy put brakes on household
spending.

• The M&S store closures are not isolated, as
companies such as Debenhams, Tesco’s and
Sainsbury’s have also been closing large numbers of
their stores (Butler, 2018)

• In the three months to March 2018 (Quarter 1), the
quantity bought in retail sales fell by 0.5% when
compared with Quarter 4 (Oct to Dec) 2017 (ONS,
2018).

THE CASE FOR CHANGE | CONSUMER TRENDS
Figure 3
Source: PwC, 2017b
In order to analyse consumer trends, business data is compared over time to identify consistent results and trends, which then
can be used to develop a strategy in response to certain trends that are aligned with the business’s goals. According to van der
Pijl et al. (2016), the most important thing is to understand the customers and what value means to them. Basing customer
insights on assumptions is one of the most dangerous pitfalls for managers and business designers, thus collecting primary
research on an organisation’s customer base is recommended.
• Consumers no longer want to leave their homes to buy commodities,
due to the convenience of the ever-increasing availability of online
shopping services, such as Amazon and Deliveroo

• The question arising from this is how to reach consumers no longer
visiting your stores? The emerging smart listening devices, such as
Amazon Alexa and Google Echo are game-changers in this context.

• Increasingly, shoppers are choosing ethically and responsibly sourced
products (Lee et al., 2017 and Luchs, 2015). M&S has addressed this
growing demand for ethically sourced products through the
introduction of ‘Plan A’, a ﬁve-year, 100-commitment, sustainable
business programme, in January 2007 (M&S, 2017).

• Omni-channel shoppers are becoming ubiquitous in the retail
industry. The separation between web, mobile, social, apps and
physical stores is becoming blurred and consumers expect a
seamless experience across these channels (Sibborn, 2017).

THE CASE FOR CHANGE | COMPETITOR REVIEW
Figure 4: Leading department stores’ estimated market shares, 2017
Source: Mintel, 2018
• Higher end department stores are outperforming mid-
market players (Mintel 2018)
• Selfridges and Harrods are benefitting from an influx of
tourists looking to buy luxury items in the UK, due to the
devaluation of Sterling (see figure 4)
• Mid-market players are losing market share due to
overcrowded retail sector and over-reliance on fashion
• John Lewis is the only department store that has grown
market share year-on-year, due to strong understanding
of core customer needs
• Market is oversaturated with fast-fashion brands, such
as H&M, Zara and Primark
• Retailers are in direct competition for market segment
share, instead of driving overall growth in the sector

THE CASE FOR CHANGE | S.W.O.T. ANALYSIS
MARKS & SPENCER’S SWOT ANALYSIS
STRENGTHS WEAKNESSES
- Well-established British brand with over 32 million
customers and high brand recognition

- Wide variety of products with a focus on high quality
products

- Strong supplier relationships, due to own-brand
business model

- Large number of stores
- Too many brands, especially in clothing, confusing the
consumers
- Public sees M&S as non-trendy, compared to
competitors such as H&M and Primark, favoured by
younger consumers
OPPORTUNITIES THREATS
- Footprint – Retailers need smaller retail spaces in
better locations, as shoppers demand more local
shopping
- Shopping experience feels inefﬁcient, and many stores
host highly unproductive space showcasing rarely
purchased items.
- Lack of investment in innovation to satisfy customer
demands is an enormous and unnecessary risk (PwC,
2017d)
- The shift to online – Traditional retailers have to
navigate an omni-channel world and compete head on
with pure play online retailers
- Oversupply – Too many retailers with too many brands
are leading to a highly competitive high street.
A SWOT analysis is a tool that confronts internal capabilities (strength and weaknesses) with external developments (opportunities and
threats) (Johnson & Scholes, 1999). Denis et al. (2007) criticise the separation between external and internal elements and believe that a
SWOT analysis should be more than a list of unrelated factors, which is consistent with the critique of the PEST analysis, mentioned on
page 5. To combat the issue, Johnson & Scholes (1999) suggest a confrontation matrix, which determines which strong and weak points
can be used to overcome threats and embrace opportunities. Moreover, Grant (2005) argues that it is impossible to typify strengths and
weaknesses, as many factors are often both. A study (van Wijngaarden et al., 2012) about the suitability of using the SWOT analysis in
the healthcare sector highlights the need for incorporating characteristics of the sector; criticism which can be applied to wider industries.

THE CASE FOR CHANGE | STAKEHOLDER PERSPECTIVES
Our priority is fixing
clothing as we’ve not
been as stylish as we
need to be.
Steve Rowe

CEO, M&S
M&S in Reading is pretty
much like every other M&S in
England. Its good for buying
socks and T-shirts but not very
e x c i t i n g a s a t o u r i s t
destination! […] If you really
want to visit a big shop then
John Lewis is probably the
most interesting and unusual.
M&S Customer

Source: Tripadvisor
The people here are fantastic, there is a
drive to do better constantly and flexibility
and scope to seek out improvements and
innovations. But the deep cost cutting
that is underway has hampered projects and
there is significant baggage from legacy parts
of the company. The continued focus on
managing cost has hurt delivery and morale
here. My advice would be to focus on
growth and innovation to surpass our
competitors, and not strangle the company
in the interest of the balance sheet.
IT Architect

M&S

THE CASE FOR CHANGE | BUSINESS MODEL CANVAS
Since the publication of Osterwalder’s book ‘Business Model Generation’, many scholars and professionals have found the Business
Model Canvas “serves as a perfect platform on which to hold better, more strategic conversations built on common understanding and
with a common language” (van der Pijl, 2016, p. 114). The use of the Business Model Canvas (BMC) by entrepreneurs is widely under-
researched in academia, as are problems and criticism associated with the BMC (Ching & Fauvel, 2013). It appears that criticism of the
model is minimal, for example, although Kraaijenbrink’s (2012) criticises the exclusion of the strategic purpose in the model, such as
mission, vision and strategic objectives, most evaluations of the model are of a positive nature.

Opportunity
Opportunity

A VISION FOR CHANGE | VALUE PROPOSITION CANVAS
“Great business models and strategies are based on great value propositions. Great value propositions focus on
customers’ jobs-to-be-done.” (Little, 2014, p. 104) One of M&S’s issues seems to be that they have been too product-
focussed in the past, when understanding the problems customers are trying to solve with these products is actually what
can drive innovation. The value proposition canvas helps in designing and validating M&S’s customers’ jobs-to-be-done.
Long queues for cashier
and changing rooms
Stores are too
big and messy
Not sure how
to pair items
Try on item seen
on social media
Purchase
product
Browse for
trend inspiration
In-store
recommendation
system
Mobile tablets to
check out items
Additional virtual
changing rooms
Smaller
stores
Curate
fashionable
items
Stylish store
design
Highly-trained
staff
Customer
service
‘Occassionals’ - under 35 year oldsTechnology-driven, small concept stores
Modern design
Fashion that

looks eﬀortless
Great Customer

Service
Personalised
& data-driven
customer
service
New shopping
experience
every few
weeks
Curated
Fashion

A VISION FOR CHANGE | NEW VALUE PROPOSITION
M&S New Value Proposition
M&S needs to make the clothing and fashion browsing experience more efﬁcient:
• Smaller spaces that don’t overwhelm the customer and are loaded with too much
stock
• Curation of fashionable items to cater to the Occasionals market segment (22
million)
• Eliminate time spent waiting in cashier queues
• Have all sizes available in-store to try on for ﬁt

A VISION FOR CHANGE | THE SOLUTION
M&S The Edit | Women’s Concept Store
M&S The Edit is a concept store that features highly curated pieces of women’s fashion, beauty and homeware pieces. The
items on display in The Edit are curated by the highly-trained staff, and the store has each item available in every size for
customers to try on. The samples are for try-on purposes only, thus reducing space needed for stock, but offering customers the
opportunity to feel the material and check the appropriate fit of the apparel, which is not available to online-only shoppers. Once
a customer has decided on a style and size, the staff is able to use their Wi-Fi-enabled tablets to show them outfit inspirations
and the customer can buy items online while in the store with same-day or next-day delivery (depending on the time the order is
placed), processing payment through mobile devices. The shops are smaller and more intimate and have a boutique-like
atmosphere, attracting younger and more affluent customers. Technology is used throughout the stores from sign-posting to
smart mirrors in dressing rooms to virtually try on clothes. The mirrors in the store contain information screens, where customers
can scan items using radio frequency identification technology. An image or a video of a model wearing the item linked to the
M&S store will appear, with recommendations of other products that coordinate well with the one they’ve chosen.
Grieder et al. (2014) state that one quarter of apparel shoppers find that digital touchpoints are the biggest influential
factor in the consideration phase of their consumer journey. By combining offline strengths with digital capabilities,
retailers will be able to see a positive impact on conversion rates and customer promotional efforts.

A VISION FOR CHANGE | THE SOLUTION | CONTINUED
The proposed solution addresses the followings needs:
Save rent on large full-line stores

Revive the struggling fashion department

Make the browsing experience easier and higher
end through better curation

Ability to tailor to different market segments (Young
women, women 65+, men)

Smaller ranges allow for more turnaround and being
able to compete with fast-fashion retailers such as
Zara, who release five times as many collections as
M&S currently

A large amount of M&S capital is tied up in real-estate. As
is evidenced by the store closures of M&S, the spaces the
retailer is occupying are too large and in the wrong
locations. Long-term leases have shifted from being
strategic investments to being a strain on the
organisation’s financial stream. Thus, organisations like
M&S are less able to invest in the customer experience or
to reduce prices, making them vulnerable to more flexible
retailers entering the market.
The solution of smaller concept stores will enable M&S to
curate products without the dependency of what is in
stock. Emerging technology such as artificial intelligence
can help with issues of inventory, by predicting customer
demand, which changes both in real-time and seasonally.
Through same-day delivery the risk of losing a sale due to
low inventory can be overcome.

A VISION FOR CHANGE | THE NEW CUSTOMER EXPERIENCE
The emergence of the experience economy has affected the retail industry particularly (Grewal et al., 2009 and Verhoef et al., 2009),
through the shift of customers’ expectations from a simple exchange process to a joyful and rewarding shopping experience (Jin and
Sternquist, 2004 and Backstrom, 2011). Concept and experience stores act as a retailer’s stage to create memorable experiences that
can evoke positive emotions, thus improving customer satisfaction and loyalty (Baron et al., 2001). Despite many industry reports
emphasising the importance for shops to create unique customer experiences, the measurement of the experience is challenging and
complex in nature. Some studies (Verhoef et al., 2009) suggest the development and use of measurement tools, such as brand
experience scales, customer experience index and net promoter score.
Figure 5: Customer Experience Data
Source: Aswani, 2016
Convenience
• Digital access through tablets by the sales staff will lead to a
quicker check-out service, reducing the amount of time standing
in line for the cashier.
• Easier browsing experience, as all items on display in-store have
been carefully curated to be trendy
Service
• The store will be modern, appealing and provide a human touch
in the digital transaction.
• Customers can watch product videos, see recommendations that
pair well with the chosen item, read reviews, check stock and add
items to the digital shopping trolley on tablets and in the smart
mirrors.
• Wi-Fi is provided so customers are encouraged to stay.
• Customer service is prominently delivered through highly trained
staff that are equipped with tablets (ﬁgure 5)
Customisation
• Dynamic digital screens can be changed to showcase
promotions, origins of products and outﬁt suggestions

A VISION FOR CHANGE | STAKEHOLDER FEEDBACK
I like the idea of a small store
with fewer queues, and knowing
that the selection there is
modern and stylish. The concept
reminds me of ‘& Other Stories’,
where I love the pictures of the
models pairing the items that
are curated as an outfit. It really
helps the fashion challenged
people like me.
Katharina M.
35-year-old

Works in recruitment
I would be really interested in receiving
training in fashion. I have been working at
M&S for 7 years now, so I’m used to
customer service. As I’m in my mid-fifties I
am not sure how fashionable I am, so I
would be a little worried that younger
colleagues would be favoured to work at
The Edit, instead of me. But I do think that
if these smaller stores really had more
authority to be able to personalise the
shops that they could become much more
accepted by the locals. Especially around
here in Surrey, the people that shop at
M&S tend to look for higher-end products.
Christine T.
Shop Assistant, M&S
I like the idea of not
constantly having to restock
the shop floor and sizes not
available to try on. Only
problem is you might have
to exchange the try-on
items, as women often get
make-up on garments and
they don’t look presentable
anymore in that case.
Sarah B.
Shop Assistant, H&M

A VISION FOR CHANGE | COMPETITOR’S SOLUTIONS
Nordstrom’s new men’s store
in New York City
• First-class service by sales
associates
• “Keyed to a younger customer, the
vast assortment is well edited and
t h a t m a k e s s h o p p i n g
exciting.” (Forbes, 2018)
• Customers can return merchandise
easily at the entrance within two
minutes
• Merchandise can be delivered the
same day for $20
• Management has opted to have
very little stock space except for
shoes
Farfetch - Store of the Future
• Te c h n o l o g y - p o w e r e d r e t a i l
experience
• Insights gathered through data
enhance human interactions between
shoppers and sales associates.
• A universal login that recognises a
customer as they check into the store
• RFID-enabled clothing racks that
detects which products are being
browsed and auto-populates the
customer’s wishlist.
• A mobile payment experience similar
to what exists in Apple Stores
Brown’s East - First new store in
20 years in Shoreditch, London
• A luxury boutique store opened its
ﬁrst new bricks and mortar store in
twenty years
• New concept for customers, which
will be ever-changing and ﬂexible,
offering a reason to keep coming
back
• unique concepts that are tailored to
the city and neighbourhood.
“Insights will be constantly gathered by our
team to adjust the technology. This iterative
approach will allow us to shape the
connected store retail experience, where we
believe technology is there to enhance and to
augment the customer experience in subtle,
magical ways.” (Deveaux, 2017)

HOW TO GET THERE | OPERATIONAL CHANGE
The Achieving Excellence in Retail Operations study (A.T. Kearny, 2016) uncovers the positive and negative aspects of store
operations. While a consistent trend of ‘smarter’ retail is identified, with companies aligning store operations and metrics to
the growing demands of an omni-channel strategy, the main challenges of adopting smarter strategies are highlighted as the
difficulty of reporting on the returns of investment in new technologies and the fact that store staff is often overlooked as
important deliverers of improved store performance. Moreover, the study points out the misalignment of consumer
expectations and the actual retail offering, such as in-store technology and social engagement that customers neither want,
need or expect. Thus an effort to please an unsegmented customer base might be creating unnecessary costs and
complexities in their operations.
Transnational
corporations
Local subsidiaries
International
divisions
Global product
division
High
Low
Low
High
Global Coordination
Local

Independence

And

Responsiveness
Figure 6: Multinational Structures
Source: Harvard Business School, 1998
• M&S The Edit adopts a transnational organisational
structure, combining local responsiveness with high global
coordination (see ﬁgure 6).
• The Edit’s operational approach decentralises decision
making and gives store managers considerable autonomy.
Store managers are authorised to make independent
decisions within the overall guidelines of M&S.
• Addresses different local consumer behaviours and also
increases employee loyalty and commitment to the
organisation, as employees are motivated by trust and
empowerment (Johnson et al., 2014).
• Strategy combines local decentralisation with global
centralisation (Johnson et al. 2014).

HOW TO GET THERE | ORGANISATIONAL CHANGE CREATES NEW VALUE
• M&S currently collects insights from their employees through
the ‘Your Say Survey’, listening groups, director breakfasts
(where directors meet with groups of employees) and in-store
events (M&S, 2017a)
• After collecting insights on how people feel about change,
options need to be created. Each option has a cost, value and
impact associated with it. The most desirable options have low
costs, but high value and impact (see ﬁgure 7).
• In such a big organisation as M&S (more than 85,000
employees) it is important to identify those most adaptable to
change with whom the options can be tested and tried
• The smaller, more autonomous The Edit stores specialised
in fashion are ideal micro-cosms for experimentation and
testing new business options, which can be adapted on a
national and international level, if successful.
There are various business transformation models that can assist managers and entrepreneurs to implement the required
change. In an interview with Lucia Adams (12 April 2018), she states that Kotter’s Stages of Change model has been
criticised, as the eight stages are often interpreted as linear. However she states that “to [her] it’s about saying these are the
ingredients to change”. She furthermore adds that Lewin’s Force-ﬁeld Analysis is a great tool to “help people say things
they sometimes don’t feel comfortable to say”, due to the risk they might sounds as if they were complaining. George Box’s
(1987) famous quote “all models are wrong, but some are useful” is often quoted, highlighting the usefulness of simple
models while simultaneously critiquing how models often over-simplify complex situations.
Figure 7: Lean Change Cycle
Source: Little, 2014

HOW TO GET THERE | MCKINSEY’S 7-S Framework
There are a plethora of change models and frameworks available and often the more linear models are preferred by
scholars and change agents, as the McKinsey 7-S framework is often criticised to be too complex. While this
framework is a great tool for diagnostic purposes, it lacks guidance for understanding priorities and actions that might
be important in sustaining and enhancing the organisation’s competitive advantage. However, according to Little
(2014), it is the complexity and the acknowledgement of the interconnectedness within today’s organisations that
makes this one of the most useful frameworks to help implement change.
McKinsey’s 7-S framework (ﬁgure 8) is a great tool to
understand how a small change in an organisation has
consequences in other areas of the business, preparing
change leaders for the potential ripple effects of change.
The model is divided into two parts:
• Hard factors: Strategy, structure and systems
• Soft factors: Shared values, skills, style and staff
The 7-S model posits that organisations are successful
when they achieve an integrated harmony among the soft
and hard factors. The hard factors are tangible and easily
deﬁnable, where as the soft factors are more complex and
ambitious elements in an organisation (Kaplan, 2005).
M&S is a large and complex organisation, which highlights
the necessity of understanding the ripple effects a small
change in one area of the business can have on the rest of
the organisation. Figure 8: McKinsey’s
7-S framework

HOW TO GET THERE | ROADMAP FOR IMPLEMENTATION
2021
2020
2019
• Develop a Minimum Viable Product (MVP) to
test in 5-10 UK locations

• MVP option: Convert 5 mid-performing Simply
Food stores to The Edit
• Partner with local modern interior designers

• Launch The Edit staff-training programme

• Partner with smart-mirror technology partners
• Upon successful experiment with MVP,
secure small stores in prime locations

• Develop a separate brand platform and
launch national marketing campaigns,
including social media influencers

• Partner with (celebrity) guest designers
to pull in new clientele
TODAY
• Accept this
business
transformation
proposal
• Continued focus on staff development
and engagement and learning from
transnational structure

• Continuous use of lean change cycle
to test new innovations
2022
• Depending on The Edit’s success, it can be
rolled out to other customer segments, such
as women 65+, a men’s boutique or kids-wear

• Men have different shopping behaviour to
women, with the average browsing-time
limited to 20mins, so the curated and stream-
lined experience at The Edit would be a game
changer in men’s fashion stores.

A VISION FOR CHANGE | RISKS/LIMITATIONS OF SOLUTION
• Instant gratiﬁcation is delayed, as the store does not
stock items for sale
• Speedy delivery requires sophisticated IT data
systems that run on artiﬁcial intelligence
• Individual stores could potentially be run very
differently due to more local autonomy, which could
cause issues in brand recognition
• Big data collected through shopping behaviours could
be misused to negotiate suppliers down, as the supply
chain is optimised
• Ensure fast delivery through same-day or next-day
delivery
• Predicting customers’ orders could increase sales and
potentially reduce shipping, inventory and supply chain
costs.
• Create strong guidelines and create stores that use
same building materials and interior design, but
differentiate through products offered
• Abide by the new General Data Protection Regulations
set forth by the EU and build trust with the customers
and suppliers that data is handled in an ethical and
responsible manner.

A VISION FOR CHANGE | ETHICAL CONSIDERATIONS
• All organisations should embrace ethics, however the
most difﬁcult challenge is at an individual’s level
• Ethics is no longer just a question of ‘right’ and
‘wrong’, but often there is more than one ‘right’ answer,
depending on the point-of-view.
• All decisions that individuals make, may it be agents
who are driving the change or any member of staff, will
have consequences for other stakeholders
• Retailers might need to consider adding identity theft
indemniﬁcation to their offering as a way to boost and
sustain trust with their customers (Intel, 2017)
• The selection of personnel for the new M&S division
could create an ethical conundrum, as many store
workers criticise M&S for favouring staff that have
worked in their shops a long time (Glassdoor, 2017).
As a solution, following the existing M&S hiring
guidelines and making jobs at The Edit and the
necessary training available to both internal and
external candidates.
Top-5 ethical principles for
digital transformation
1.Design for privacy, security and integrity
2.Promote trust
3.Beware of bias
4.Ensure there is accountability
5.Promote an ethical culture
Source: Yardley, 2018

SUMMARY
• M&S is a British department store with the mission of ‘making every moment special’
• Despite a strong market share, profits have been declining for many years
• CEO Steve Row has set forward a business transformation plan that is not delivering the desired outcomes
• M&S needs to adapt to macro-environmental factors, as well as changing consumer demands, which are evolving rapidly
in line with technological developments as well as industry trends
• The key macro-environmental influences on M&S are the after-effects of the Brexit vote, a shift in consumer’s shopping
behaviour to an experience economy and the rapid advancements in technology enabling refined online shopping
experiences
• In order to address the opportunities identified from user research and the use of the business model canvas, M&S needs
to provide value to its consumers in a more curated and efficient in-store and online shopping experience
• M&S The Edit is the perfect balance of the online benefits in a real store experience
• The small stores deliver strongly on customer service through highly trained staff, and it addresses the job-to-be-done of
its customers who want to be able to try on garments for fit without the hassle of a big, messy store experience
• The in-store online elements, such as the smart recommendations screen and the online orders present convenience and
efficiency
• The risk of consumers going in-store to experience instant gratification is overcome through same-day and next-day
delivery, depending on the time of day the order is placed
• Speedy delivery requires sophisticated IT data systems that run on artificial intelligence and can predict trends and adjust
stock in UK warehouses accordingly

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REFERENCES - INTERVIEWS
Lucia Adams - Digital Transformation Consultant: 12 April 2018
Christine T. - Shop Assistant, M&S: 21 April 2018
IT Architect, M&S - 3 May 2018
Sarah B. - Shop Assistant, H&M: 21 April 2018
Katharina M. - Recruiter: 3 May 2018
REFERENCES - CUSTOMER REVIEWS
TripAdvisor (2017) Marks & Spencer. Available at: https://www.tripadvisor.co.uk/Attraction_Review-g186363-d584897-Reviews-
Marks_Spencer-Reading_Berkshire_England.html (Accessed: 1 May 2018).

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