There is one thing worse for retailers than having insufficient stock, and that is having too much, Marks & Spencer chief executive Marc Bolland said today.
Speaking as he revealed that M&S had run out of some best-selling womenswear lines during the fourth quarter, Bolland maintained it was a short-term blip – partly weather-related – and maintained: “It would be a different story if we were sitting on a mountain of stock that we couldn’t sell.”
During February’s cold weather, there was a run on product such as knitwear just as the retailer was moving into its spring and summer lines. That meant M&S sold 100,000 items of knitwear when it could easily have shifted three times that number.
Some of the affected products were at the ‘better’ and ‘best’ end of M&S’s price architecture, which meant especially valuable sales were lost.
The availability mishap prompted some to ask whether M&S was a victim not just of the cold weather, but of a failure of retail disciplines including lack of confidence among buyers.
Bolland accepted that buying had not been deep enough but insisted that it was simply an upset. The difficulties experienced did not signify a need for any structural change, he said, although he added that merchandising capabilities are being strengthened.
He said that M&S’s fashion sense had been “bang-on”, that there had been no problems in many categories and that buyers’ confidence in buying deep product was growing.
In fact the bulk of the decline in M&S’s general merchandise sales was attributable to the retailer’s withdrawal from technology. That drove a 7.5% fall in home category sales, while clothing was down only 0.3% overall.
However the 2.8% slide in Marks & Spencer’s general merchandise like-for-likes over the quarter was not at all what the City had expected and has prompted some anxiety.
Investec analyst Bethany Hocking said that the stock shortage was partly a result of “top-down instructions” to buyers. She observed: “All in all it sounds like the issue is being addressed but nonetheless it is a bit of an operational own-goal.”
Bolland is right that had M&S had a stock-overhang it would have faced fierce criticism. But lost opportunity has a cost too, and M&S’s buying confidence and flexibility of supply will surely be under greater scrutiny after the fourth-quarter stumble.
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