Marks & Spencer to launch food-only stores in ČR

British retailer makes more from food than from clothes worldwide

UK-based retailer Marks & Spencer announced that it will open food-only (M&S Simply Foodshops in the Czech Republic. The retailer already has food departments in its Prague outlets, located mostly in shopping malls plus it flagship at Wenceslas Square. The company is also present in eight other Czech cities, with a total of 20 stores.

The new food shops will open as soon as next year, the marketing manager of the Czech branch of M&S, Zdeněk Hašek, told the magazine Marketing & Media. Some existing stores may also close. There was a period of expansion, but not all of the Czech stores are profitable. “We want to slim down to a healthy core,” Hašek told the magazine.

For expats, Marks & Spencer offers a wide range of British-style and Indian foods that are otherwise difficult to find, including spicy sauces, specialty cakes and breads, peanut butter, canned soups and stews, salads, microwave-ready and frozen meals, and desserts. They also have seasonal selections of Christmas cakes and puddings and special delicacies for other holidays, as well as an extensive wine and beverage selection.

M&S is now looking for suitable locations for the food-only stores. Globally, food generates more profit than clothes for the retailer. That has not been the case so far in the Czech Republic. The M&S outlet at the Nový Smichov is one of two Czech locations to see more profit from food. “In the UK, the ratio is 60 to 40 in favor of food, but for us it is still two-to-one in favor of clothing,” Hašek said.

Another planned innovation is the introduction of an e-shop that will carry almost all of the UK retailer's catalog. A smartphone app may also soon take the place of plastic loyalty cards. The e-shop could open next year, while the app could be available in September.

Internationally, Marks & Spencer has a new CEO, Steve Rowe, who in took over in April. In May he announced sweeping policy changes to get back to basics. These include reducing sales promotions and adding more staff. He also intends to lower clothing prices and improve quality. “"We won't chase the most fashionable trends; we want to get back to what made us successful,” Rowe said. The long-term plan is to return the clothing sector to growth by focusing more on what the typical M&S customer wants: style instead of fashion.

Hašek said the new focus would be to get out of a dangerous perpetual spiral of discounts and sales. The store will focus on timeless clothing styles, as well as quality and affordability. Core categories will include formal wear and essentials such as undergarments.

M&S was founded in 1884 by Michael Marks and Thomas Spencer in Leeds, and is colloquially referred to as Marks & Sparks. In 1998, it became the first British retailer to make a pre-tax profit of over £1 billion, but its fortunes changed after that and its profits began to slump, and in 2015 profit before tax was £600 million. The Czech branch of Marks & Spencer has been registered as a company since Feb. 29, 1996.

At the same time, rival UK-based retailer Tesco is closing some of its unprofitable food stores in the Czech Republic and Poland. Some 20 percent of its Žabka brand convenience stores closed in the 2015–16 fiscal year. Tesco took over the Žabka chain in 2010.

French retailer Carrefour, which ran food markets, left the Czech Republic in 2005, selling its outlets to Tesco. In the same year, supermarkets owned by Austria-based retailer Julus Meinl in the Czech Republic were acquired by Ahold and rebranded as Albert stores. Meinl attempted unsuccessfully to re-enter the Czech market in 2014 with a new gourmet store near Wenceslas Square, but it quickly closed.

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