We invest heavily in shops and high streets – now the government MUST play its part and end corporate ‘daylight robbery’ tariffs, says M&S boss STEVE MACHIN
As I led my first streak of results as CEO of Marks and Spencer this week, I had the words of one of our founding fathers in my ears.
In his 1937 presidential address, Simon Marks said that modern business requires “a flexible mind, quickly registering significant fluctuations, an active imagination to create, and a courage to venture.”
With maximum uncertainty, those words have never been more true for leaders. And guts is what we show at M&S.
Stuart Machin: ‘As I led my first streak of results as CEO of Marks and Spencer this week, I heard the words of one of our founding fathers ringing in my ears’
We must do so if we are to face what is a crisis in operating costs – our energy costs alone will rise by £40 million this year – while supporting our customers and colleagues through the cost of living crisis.
For our customers, guts means going back to our DNA: delivering great value to customers every day with quality worth every penny.
One of my first decisions as CEO at the beginning of the summer was to hold our prices and invest in value – and I’m sticking to that. Pricing for over 100 customer favorites in Food and discounted entry prices in our largest – and essential – apparel categories such as underwear.
And it has paid off: food sales are growing faster than the market in volume and value, and our apparel business is showing momentum; market leader in value AND quality. But of course, with inflation at record levels, our food profits took a temporary hit – so we’re working hard to become more efficient and faster through bold steps like buying our supply chain partner Gist.
We’re also showing courage by reimagining our retail landscape, where more than 40 percent of our stores predate World War II.
I’m committed to having great stores and while others go online – or go out of business – we invest heavily in stores as the core of our ‘omnichannel’ offering (stores and online work together) so that customers can truly shop the way they want, when they like. For example, our recently relocated stores in Paisley and Sears Solihull, where sales were up 17 percent.
And our investment is crucial. With approximately 65,000 colleagues and approximately 1,000 stores in the UK, we anchor communities across the country. And we take that responsibility seriously.
But our stores can’t be in aspic. They can’t be museums for bygone days of retail. They have to change – because what our customers want has changed. Marble Arch is one such example.
Today it is a rather dilapidated site and during the recent public inquiry we made our proposal to transform it into a building we are proud of, and one of the most environmentally friendly buildings in our capital. Not everyone agreed, but it became clear to us that our plans are the only viable option to ensure a thriving Marble Arch site that provides more than 2,000 jobs, attracts more visitors and contributes to a net-zero transition in an area of Oxford Street in dire need of investment.
But running a retail store costs a lot more than running an online business, and much of that is down to corporate rates unrelated to profit or, indeed, reality. That’s why the total retail tax rate is about 70 percent and why it pays 25 percent of all business rates despite being 5 percent of the economy.
And that’s why shopping streets and city centers are increasingly filled with vacancy and seedy shops; the rates have risen by the same amount as the value of retail property has fallen. Honestly, it’s daylight robbery.
As retailers, our job is to innovate and make the tough decisions to keep our businesses running and – if we can – grow in really tough times. So that we can employ millions of hardworking people,
support subsistence farming in the UK, invest in our shops so they can act as anchors across the country and support the treasury.
Looking ahead to this week’s fiscal update, all we’re asking from the government is a fair shot, meaning the interest rate multiplier needs to return to its original 1990 level of over 50p in the pound to 35p in the pound. We don’t want handouts – we just want honesty.