Exhibit 1: M&S’s Christmas advert arguably ‘won’ the Christmas advert game this year, but retail sales continue to slump as it rises to the challenge of an increasingly digital customer.
Marks & Spencer (M&S) has a core presence on the UK highstreet: every Brit will tell you that it is the go-to place for socks, tights and underwear. While M&S has remained steadfast as a quintessentially British, traditional, brick-and-mortar store, the UK retail landscape around it has evolved rapidly. Newer fast fashion entrants increasingly dominate the market, enrapturing younger generations, while M&S clothing has struggled to define a target customer and keep up with appropriate trends. This competitive threat has been compounded by M&S’s slow response to the change in customer behaviour from in-store to online. Slap on legacy supply chain issues, and the combined effect is a multi-year sales decline in their clothing and home business, with same-store sales down 8.9% in Q1 earlier this year, worse than bearish analyst predictions (Exhibit 2) .
Exhibit 2: Continued and deepening decline in M&S sales 
The retail group recognises the importance of digital in the turnaround of its clothing business, listing this as a top risk to future performance (Exhibit 3) . Britons are the biggest buyers of clothes online in Europe , and increasingly expect retailers to deliver on the unspoken customer promise of a seamless omni-channel buying experience. A shopper may see a product in the shop window, browse it on a phone, make the purchase on a laptop, and pick up the product in-store. So what has M&S done to address this? Enter M&S Venture Lab.
Exhibit 3: Adapting to changing consumer behaviour is listed as a top risk to future performance 
M&S Venture Lab – “the need to evolve”
M&S’ digital retail presence has had a tumultuous history. Until relatively recently, M&S.com was not even owned by M&S – it was run by Amazon. Then CEO Marc Bolland recognised that this was like “driving a rent-a-car…If you want to win in the game, you never do it with a rent-a-car”. With a £150M investment, the website was migrated, redesigned and relaunched on an M&S-owned platform (February 2014), imperative in positioning the retailer for the future . The new website encountered significant teething problems – confusing customers with its requirement for existing customers to re-register and technological glitches making it difficult to find products, and delivering orders to incorrect addresses. This received significant media attention and caused an avalanche of customer complaints (Exhibit 4).
Exhibit 4: Frustrated customers vent on www.thisismoney.co.uk 
Learning from past mistakes of delaying investment in technology in the face of changing consumer behaviour, M&S established a new unit: M&S Venture Lab. This creative digital division uses lean start-up techniques to experiment ways to improve the customer shopping experience, exploring how they might shop in 5-10 years’ time. Ideas extend to “a post-PageRank world where every home has an AI-based assistant, or what garments we’ll be wearing post-cotton (and how we might print them)”. This internal experimentation, testing and scaling ideas with small budgets of thousands, is geared to internally building digital capabilities and products that they would otherwise expect to acquire later for millions to catch up with competition .
An example project is TryTuesday.com, an online personal stylist (Exhibit 5). After a few initial questions, the user is introduced to their personal stylist who handpicks M&S outfits/items to solve the wardrobe problems the user is facing – tailored to their lifestyle, body shape, budget, and aspired look. The user is free to buy what they like and provide feedback on what they don’t, the latter enables the stylist to understand their taste .
Exhibit 5: ‘Tuesday’ is an online personal stylist service; users upload a photo, answer questions in a one-on-one chat and can call their personal stylist to discuss their fashion needs 
The virtual stylist addresses the greatest challenge retailers face: technology has replaced much of the human relationship between store and customer. Through Tuesday, M&S can personalise the user’s online experience, and regains the luxury of talking directly to an online shopper.
Looking ahead: Stores still matter
As the rate of digital sales increases, retailers are faced with the dilemma of what to do with their physical stores. The easiest solution to help their bottom line is accelerating store closures. M&S appear to be doing this, with 60 planned branch closures by 2021 . This can be short-sighted, as it diminishes their catchment area and reduces scale benefits. Looking ahead, the role of the store will still matter, as few categories will reach 100% online penetration, and shopping will continue to be a social and tactile experience .
Instead, M&S should focus on innovating their in-store experience. Their ‘browse & buy’ in-store kiosks are a step in the right direction (Exhibit 6). These enable customers to scan bar-codes on items and order these in their size during stock-outs, or view and purchase items on M&S.com which are not available on display .
Exhibit 6: ‘Browse & order’ in-store kiosks were trialled in the Cheshire Oaks outlet store before nation-wide rollout (see here for a video demo) 
They can however, take this one step further with features such as interactive digital displays/storefronts, touchscreens, magic mirrors or virtual dressing rooms, learning from industry leaders. Rebecca Minkoff, for example, are years ahead in their use of data and technology (Exhibit 7) .
Exhibit 7: Rebecca Minkoff’s flagship store in New York City demonstrates cutting edge use of technology in a brick-and-mortar store
M&S may have started off on the back foot, but it’s never too late to teach an old dog new tricks.
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- Erica, “The secret high street styling service you need to know”, The-Edited, September 25, 2016, http://the-edited.com/2015/09/25/the-secret-high-street-styling-service-you-need-to-know/, accessed November 17, 2016
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