We are investing heavily in stores and high streets – now the Government MUST play its part and end the business rates ‘daylight robbery’, M&S boss STEVE MACHIN says
As I led my first set of results as CEO of Marks and Spencer this week, I had the words of one of our founding fathers ringing in my ears.
In his 1937 Chairman’s speech Simon Marks said that modern business ‘demands a flexible mind, quick to register significant fluctuations, an active imagination to create, and a courage to venture.’
With uncertainty at its maximum, never have those words been truer for leaders. And courage is what we are showing at M&S.
Stuart Machin: ‘As I led my first set of results as CEO of Marks and Spencer this week, I had the words of one of our founding fathers ringing in my ears’
We need to if we are going to withstand what is a cost-of-doing-business crisis – with our energy costs alone rising by £40million this year – at the same time as supporting our customers and colleagues through the cost-of-living crisis.
For our customers showing that courage means getting back to our DNA: great value for customers every single day with quality worth every penny.
One of my first decisions as CEO in early summer was to hold our prices and invest in value – and I stand by it. Locking prices on over 100 customer favourites in Food and sharpening entry prices in our biggest – and essential – clothing categories like underwear.
And it’s paid off, with Food sales growing ahead of the market in volume and value, and our Clothing business showing momentum; leading the market on 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, fast, through bold moves like buying our supply chain partner Gist.
We’re also showing courage through reimagining our store estate where over 40 per cent of our shops pre-date the Second World War.
I’m committed to having great shops and while others go online – or go bust – we are investing heavily in stores as core to our ‘omnichannel’ offer (stores and online working together) so customers can genuinely shop how they like, when they like. For instance, our recently re-located Paisley and Sears Solihull stores, where sales are up 17 per cent.
And our investment is crucial. With around 65,000 colleagues and circa 1000 stores across the UK we anchor communities up and down the country. And we take that responsibility seriously.
But our stores can’t sit in aspic. They can’t be museums to bygone days of retail. They must change – as what our customers want has changed. Marble Arch is one example of that.
Today it is a fairly decrepit site, and at the recent public inquiry we set out our proposal to transform it into a building we’re proud of, and one of the most environmentally friendly buildings in our capital city. Not everyone agreed, but it became clear to us that our plans are the only deliverable option to ensure a thriving Marble Arch site providing over 2,000 jobs, driving footfall and contributing to net zero transition in an area of Oxford Street sorely in need of investment.
But running a shop costs a lot more than running an online business, and a large part of that is down to business rates which have zero link to profits or, indeed, reality. It’s why the total tax rate for retailers is around 70 per cent and why it pays 25 per cent of all business rates despite being 5 per cent of the economy.
And it’s why high streets and city centres are increasingly full of vacancies and dodgy shops; rates have gone up by the same amount as retail property values have gone down. Frankly it’s daylight robbery.
As retailers our job is to innovate and take the tough decisions to keep our businesses going and – if we can – growing in really tough times. So we can keep employing millions of hardworking people,
support UK farming which is on life support, invest in our stores so they carry on acting as anchors across the country, and support the public purse.
As we look ahead to this week’s fiscal update, all we ask from Government is a fair shot, and that means reducing the rates multiplier back to its original 1990 level from over 50p in the pound down to 35p in the pound. We don’t want handouts – we just want fairness.