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‹ UK high street, and UK retail sales experienced a downturn. bought overcautiously for spring and as a result, the bestselling The currency depreciation associated with Asia’s economic situation actually helped competing firms, which sourced their clothes there, to price their offerings keenly.97 This would have mattered less, however, had M&S’s own offerings been more attractive. However, the clothes themselves were described as ‘dull’ by CEO Peter Salsbury in explaining the 1999 results and by others as ‘frumpy’ and ‘boring’.98 The layout of the stores in which they were displayed also came in for criticism.99 Meanwhile, mainstream supermarkets such as Tesco had begun to match M&S’s chill-cooked meals, a product category which it had practically invented.100 With fewer customers for the core offerings, market share in homewares, a subsidiary line, also suffered.101 The poor 1999 results shook the firm out of the state of equilibrium that had existed during the profitable mid-1990s. Salsbury trimmed the size of the board, made 200 head office staff redundant, and formed the company’s first centralized marketing department, which presided over its first ever TV advertising campaign.102 But when it came to improving what was on offer to the public, it became clear that the firm had problems in understanding what its core customers, in particular those for its key womenswear ranges, would buy, in what quanitities and at what price.103 For example, a company spokeswoman gave the following account of the 1998 autumn season: ‘Grey was the fashion colour so we bought into it, but the mistake was that we bought it for everybody. Older customers wanted colour and we were missing it . . . By the time we realised, it was too late to buy more colour. We’d had a very successful year previously, so we were confident and bullish about buying. On reflection we bought too much fashion and too much grey . . . It meant that we
items sold out very early.’104 Other commentators confirmed that the firm had found it difficult to establish the right point in the trade-off in women’s clothing, so that some ranges were too zany for the traditional M&S customer while others were too conservatively styled, and others appeared overpriced.105 By 2006, however, the firm, under a new management team headed by Stuart Rose, and with the aid of focus groups and other market research, appeared to have rediscovered its grasp for what the public wanted to buy. It had emulated H&M and other competitors in developing sub-brands to appeal to particular market segments, and had also benefited from some inspired advertising for its food and clothing.106 The root cause of the company’s apparent inability to foresee and handle the setbacks of the turn of the century is a matter of debate. Sir Richard Greenbury, Salsbury’s predecessor as CEO, was one of the most respected retailers of his generation,107 but in contrast with previous chairmen, he was said to have stopped visiting rivals’ stores, or asking colleagues what new developments there were.108 This may have contributed to a degree of introversion in M&S; according to one strategy consultant in 1999: ‘A number of competitors in both food and clothing have damaged M&S but I doubt it even picked them up on its radar screen until it was too late.’109 Other commentators wrote that the firm’s prolonged success had engendered ‘corporate hubris: the idea that there is no need to change a winning team’ and complacency—which Salsbury himself admitted was a problem.110 But as we have already noted, both Salsbury and his successor, Luc Vandervelde, took action aimed at arresting the decline; however, once an equilibrium is disturbed, it takes time to build the routines to create a new one.
l CHAPTER SUMMARY In this chapter we have described strategy formulation as a multi-headed process. Sometimes it is the formal, rational, planned process that it has traditionally been seen as. But we have also introduced you to the idea that strategies can come about, not exactly by accident (although that can also happen), but through experimentation and the purposeful activities of all employees in an organization, not just the chief executive or top management team. A strategic decision is one that involves a significant commitment of resources, throughout a substantial part of the organization, and will have a long-term impact on the organization as a whole. The various types of strategy have been characterized as: l
deliberate—planned actions resulting from careful analysis;
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emergent—from the spontaneous actions of employees solving particular problems or responding to unforeseen opportunities;
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imposed—by governments, customers, or other powerful stakeholders;