M&S gets it wrong in Shanghai

Image by jiazi via FlickrMark and Spencer (M&S) first flagship store in Shanghai is getting it wrong, say many observers in the Financial Times, and the M&S management already decided to dump their China boss. The store, opened with much fanfare at the end of last year. Malcolm Moore in the blogs of The Telegraph:

Everyone who knew Richard Sweet (I didn’t) said he was a good man who found himself in a very difficult position.
His 20 years of experience opening stores in India, Russia and the Middle East apparently didn't prepare him for what he came up against in China – especially when he found much of his stock impounded at Shanghai customs.
I’ve been back to the store and I think it’s really finding its feet. It has a poor location, and trading is quiet, but on my last two visits the customers were almost exclusively Chinese, which means that M&S Shanghai may not have to rely on biscuit-buying expats for its future.

In the Financial Times three of my speakers at the China Speakers Bureau comment on the M&S debacle, all make sense, be it in a very different way. Paul French deals with a common misunderstanding of foreign correspondents and expats in general that stores like Mark&Spencers should cater for them.

However, Paul French, Shanghai-based retail analyst for Access Asia, dismisses expat complaints: "Who cares? You can't base a business on expats, there aren't enough of them." He says that Chinese consumers are still spending strongly, in spite of the global crisis, with Shanghai retail sales up 25 per cent year on year over the January 1-3 public holiday.
Mr French says that he thinks the store is "starting to do OK", arguing that a department store should be judged only 12 to 18 months after opening its doors.

Especially the problems in the food section, typically one of the hot spots for these stores, caused much of the problems, says also China rich list composer Rupert Hoogewerf:

Rupert Hoogewerf, publisher of the China Rich List and an M&S fan, says that the erratic food shipments arriving at the store so far suggest that "M&S has got its knickers seriously in a twist about supply chain management".
M&S says that its food problems will soon be resolved. Of the 1,000 food lines originally promised, 45 per cent had been restored by yesterday and fully stocked shelves are expected next week.
This will doubtless make homesick those Brits happy, but larger questions remain about the viability of the Shanghai store, which has a large and expensive footprint on Nanjing Xi Lu, Shanghai's Oxford Street.

Again, the misunderstanding that the store should also cater for the Britons rather than the Shanghainese is very hard to root out. Shaun Rein, of the leading China Market Research Group (CMR) confirms the company got it all wrong in positioning themselves among the Shanghai middle-class:

Shaun Rein, managing director of China Market Research, says that M&S is falling between two stools: "They're not cheap, but they are not expensive, so what are they?"
China's aspirant middle class, which M&S is aiming to attract through its portals, "are looking for luxury and style at one end, or better value at the cheaper end", Mr Rein says.

Again, Shanghai as confirmed its position as difficult ground for any consumer oriented firm.

CommercialRupert Hoogewerf
by Getty Images via Daylife
At the China Speakers Bureau we are happy to work with some of the leading retail specialists, mentioned in this article: Paul French, Rupert Hoogewerf and Shaun Rein. If you need them to share their thought with you, do get in touch.

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