Comment: Retailers must heed Marks & Spencer’s international strength

Marks & Spencer’s international arm remains robust, widespread and underrated. The iconic British brand has entered 45 countries and re-entered Paris last year after initially getting its fingers burnt.

Their activities are also indicative of a growing retail trend to expand abroad, and about time, too. For too long, too many UK retail brands have been too parochial, focussing energy and investment on the UK alone. Yet for some years now, a number of brands, M&S included, have been busy building a growing footprint of international stores using a franchise trading agreement with established (and sometimes not so established) franchise groups in emerging markets.

As the tide has turned on the UK economy, a number of retailers have found themselves beached with no hope of recovery, yet those businesses that were able to rely on revenue and profits abroad have been able to survive. I believe that international retailing is the single most important area of retail today. That’s not to say that it generates the most cash (yet), or attracts the most press, but it is the most sustainable form of income for UK retailers, for it relies on income from outside our depressed economy and from multiple markets: eggs and baskets springs to mind.

So with nearly 400 stores now operational outside of the UK, M&S’s international expansion should really start to figure in analysts’ commentary. Marc Bolland has certainly drawn attention to their endeavours, yet it still remains a relatively unreported aspect of the business. One possible reason for this could be the city’s perception of M&S being a “retailer” as opposed to a “brand”.

In contrast, while not comparable in customer segment, Burberry is very much noted for being an international brand – not a retailer – with strong international expansion. The recent news about expansion slowdown has seen its market cap hammered, demonstrating the city’s sensitivity to this aspect of Burberry’s business. This is a harsh response to the news, I would argue, but for the purpose of comparison, it is interesting that the city value Burberry’s market spread yet choose to overlook M&S’s. Yet, as a retailer that owns its entire product IP, I would argue M&S’s ability to land and expand in new markets is compelling and far from complete.

While work will always need to be done on refining a supply chain that was built for a British market, or even a buying team that has catered for British tastes, M&S’s ownership of its retail experience gives it the right core ingredients to capitalise on new market opportunities. I wonder when the City will start to acknowledge this opportunity and whether that will, in turn, change the basis of their share price. For a company of M&S’s size and market cap, I think they should, as the share price looks very “good value” considering the opportunities that lie ahead.

• Tristan Rogers, chief executive of ConcretePlatform, advises large retailers including Tesco, Wal-Mart, Marks & Spencer, Clarks, Mamas & Papas and Jaeger on international expansion