Marks & Sparks Trades Up

"St. Michael "goes for class

Few British institutions have been so determinedly middle class as Marks & Spencer. The company's 254 U.K. department stores, which constitute the country's largest retail chain, sell little that is fashionable or chic; instead, their mainstay is lines of inexpensive and respectably dull (though high quality) sweaters, shirts, bras and lingerie. This value-for-money formula has paid off handsomely: M & S's 14 million weekly shoppers give it annual revenues of $1.9 billion and profits of $184 million, both more than four times those of its largest competitor, British Home Stores. But M & S has so saturated the middle-brow market with its reverse-chic lines that it has little room left to grow there. So, eagerly, it is starting to change. Last month it opened its first "up market" store in London's smart Kensington district. M & S has also opened stores in France and Canada; its U.K. branches now stock such previously unavailable luxury items as pure cashmere coats, glassware, fine bone china and--in the food sections --mangoes, passion fruit and a line of house-brand champagne rated on par with Moet et Chandon.

All that is quite a departure. Michael Marks, who joined forces with Tom Spencer and later gave his name to M & S's in-house St. Michael brand line, traded under the motto: "Don't ask the price, it's a penny." His son Simon, taking over the group of 60 bazaars upon Michael's death in 1907, imported from the U.S. the concept that better working conditions make workers happier and more efficient. The company trusts junior saleswomen to restock their own counters as necessary. Indeed, the company tries to cut out paperwork wherever possible. It employs no buyers as such, but--buying British where possible and often taking more than 50% of a factory's output--goes directly to 550 suppliers. Though some suppliers moan that the company strangles them, they know that M & S's quality controls make their goods more salable and give them secure, year-round markets.

The approach pays off in terms of hard cash. British unions have never been able to crack M & S, and the rate of absenteeism among workers is a mere 3%--less than might be expected from illness alone. Customers flock to the chain in such numbers that the company's flagship Marble Arch store in London was ranked by the Guinness Book of World Records as the world's most profitable shop in 1977. The chain claims to take in one-eighth of all expenditures for clothing in Britain.

But that leaves no worlds to conquer at home; in recent years much of the chain's fast sales growth has come from shopping by foreign tourists. Oddly, they include many Arabs--though the chain's top officers are such fervent Zionists that Marks & Spencer is on the Arab blacklist. Middle Eastern customers must snip the St. Michael's label out of the clothing they buy before bringing their purchases home. Still, M & S has seen fit to post signs in its main branch stores warning against pickpockets in English, French, German, Arabic and Farsi (the main language of Iran).

In an effort to prompt more buying from up-market British customers, Marks & Spencer is now using its Kensington store as a kind of laboratory to see which new fashions and higher-priced goods will sell. In its first five days of business, this store--which to shoppers looks little different from other modernized branches in the chain--is said to have had sales close to $1 million. M & S is looking for a formula that will appeal as much to dowagers and duchesses as to the present line of customers. Legions of faithful shoppers will be praying to St. Michael for M & S's success. -

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