Interview: Steve Rowe, Marks & Spencer’s man on the frontline

During the glacially cold trading conditions of the recession, retailers had to be at the top of their game to survive the freeze.

Along with compelling product and consummate selling skills, service, store operational excellence and efficiency were - and remain - essential. At Marks & Spencer, the latter is the responsibility, along with the Direct business, of retail director Steve Rowe.

Interviewed in M&S’s Westfield London store - before Wednesday’s first-quarter trading update - Rowe points out some of the improvements and initiatives he has led, ranging from improved visual merchandising and changes to the offer in that particular shop, to across-the-chain innovations such as the Shop Your Way service.

Starting out

Having worked at M&S since 1989, Rowe had been through the early 1990s recession and says the business was better prepared when the bank-precipitated meltdown of 2008 and 2009 hit retail.

“We were quicker at recognising it was coming and getting the business in shape,” he says. “We could cut back commitments quicker and make cost base adjustments.”

Last year M&S managed to make £145m of underlying cost savings and Rowe played his part. Retail, he says, cut its cost base by £70m without affecting customers.

One of the big successes Rowe achieved was to cut shrinkage for the first time in more than a decade. While the stores sector as a whole suffered one crime a minute, M&S experienced the opposite of the rising trend as a result of better business practice.

“Last year theft and loss went down for the first time in 15 years,” Rowe says.

“We invested in things like electronic article surveillance, training and awareness and had stock-loss bootcamps for managers.”

But Rowe was not only focused on how to save money. The other side of the coin was to improve the customer experience - something he was determined to address as soon as he took up his present role and joined M&S’s executive committee in March 2008.

He says: “We were scoring relatively high marks on service criteria so I made it 10 points harder, then another 10 points.”

Over just one month, more than 1 million customers noticed a difference, Rowe reveals, and he is convinced there is more to come.

“I expect we will continue to drive that on,” he maintains. “The boys and girls on the shopfloor will continue to develop - if we go one more stage we will be untouchable.

“We have become very good at basic service. What I want to do now is develop empathy.” That, he believes, would change the game and distinguish those elements of service that should be part of the retailer’s “well-oiled machine” and “those that delight customers”.

Rowe’s stewardship of M&S’s Direct arm has also brought progress. The retailer is well on the way to achieving its target of generating £500m of sales from multichannel operations by the end of this financial year - last year Direct sales climbed 27% to £413m - and has replaced its old in-store ordering system with the Shop Your Way service.

Shop Your Way allows customers to order from home or in a shop and have items delivered to any location. The service had been introduced to the 300 stores at the time of the results in May and is now being rolled out into Simply Food stores.

After a trial in 11 Simply Food shops, the service will be available in 144 by the end of this summer. “People who shop by phone, in-store and online spend more than anyone else,” Rowe says.

Other initiatives include the launch of a mobile phone shopping site and, although still low in comparison with traditional channels, revenue is doubling every week.

Such innovations form part of M&S’s response to the rapid changes that the digital age is prompting in the retail industry. Rowe observes: “The big thing for me is how broad the customer base is becoming. It [multichannel] was about young, geeky people - it’s not now. The fastest growing group is now silver surfers.”

Digital love

M&S has embraced the digital world with initiatives such as a Twitter feed, a Facebook page - it has 125,000 followers and its Percy Pig sweet has 23,000 - and changes to its own site including a relaunch last year adding elements such as catwalk videos and interviews.

Rowe values in particular customer reviews, although he admits that on Facebook a “Marmite-style” division of reaction is more evident. “Good or bad, we want to know what customers think,” he says.

The convergence of channels is likely to mean more big changes to come for retailers, Rowe suspects. Thinking aloud, he speculates that sales might eventually be measured by region rather than on a store like-for-like basis, as is typically the case now.

The issue arises because of the difficulty of allocating a sale when, as is increasingly prevalent, an online order is being picked up from a shop. The implications are practical too. “If in future the store is more of a showcase and everyone buys online, how do I staff the stores?” muses Rowe.

At last October’s strategy day for investors, Rowe said he thought M&S would eventually offer food online but admitted - and it remains the case - that he did not know how or when.

M&S’s 2020 business improvement project will also affect stores. The stock management system is being improved and, by the end of next year, a new point-of-sale system will be deployed in all shops.

Rowe welcomes such enhancements, which will for instance reduce the number of till processes on a refund from 27 to four, but will be careful that they do not distract staff. “I’ve got 20 million customers a week who don’t care about 2020 - they care about things like great service and environment. The store team needs to focus on doing the right thing for the customers today,” he emphasises.

M&S’s stores are Rowe’s obsession, even at weekends when, unless he is watching his beloved Millwall play, he will pop into the shops near his home - such as Orpington or Bromley - to see how things are going.

His long association with the business means he is often thought of as an M&S lifer - a label at which he bridles. “Everyone misconstrues that,” he says, pointing out both the extent to which M&S has changed and the huge variety of experience his time there has brought. “I haven’t done the same job for more than two years and I’ve probably seen more of retailing than if I had changed companies every two years,” he argues.

He says the business is now unrecognisable from the one he joined after jumping ship from Topshop and recalls: “The cultural change of stepping from Topshop to M&S, which was probably a bit like Grace Brothers then, was huge. Everyone was called mister - it was like going back to school.”

Such traits contributed to M&S’s difficulties in the late 1990s and at the turn of the millennium. Rowe pays tribute to the contribution made by Sir Stuart Rose in putting M&S back on track after fending off a takeover attempt by Arcadia tycoon Sir Philip Green in 2004.

Rowe says: “Now there’s a pace and energy that wasn’t there, and a lot of that is down to Stuart.” As Marc Bolland takes the helm as M&S chief executive, Rowe is looking forward to continued momentum.

He says: “The early 2000s were dark days. We have taken the business from the edge of an abyss into one that is in good shape. What’s good is that Marc Bolland can have conversations about how to grow the business, not about recovery.”