Close-Up: Live Issue - Has M&S been saved by advertising?

Marks & Spencer's fortunes are on the up. Can its ad campaigns take some credit, Noel Bussey asks.

In May 2004, Marks & Spencer was a crumbling high-street relic, imploding under the weight of declining sales, diminishing footfall, lack of consumer confidence and stories about boardroom battles.

Its share price had fallen to below 200p from around 400p in 2002.

Investors were worried. Confidence from the City was low. And the entrepreneur Philip Green was trying, for the second time in five years, to buy the company.

The interest from Green led to fears in the City that a takeover would significantly increase the amount of debt on the retailer's balance sheet and bring the share price down even further.

In a bid to head off Green, the M&S shareholders called for the board to hire Stuart Rose, the former chief executive of the Green-owned Arcadia retail group.

"M&S was definitely floundering. Nobody could really see where growth was going to come from," Maureen Hinton, a senior analyst at the retail analyst Verdict, says. "It was struggling in the high street and losing sales to its competitors, while the Green situation was causing massive instability."

Green's bid was successfully deflected and Rose, who had been installed as the M&S chairman, created a three-point plan to save the retailer: investment in the product; in communications; and in the stores themselves.

"It was no good advertising to get people into the store if there was nothing for them to buy," Steve Sharp, the M&S executive director for marketing, e-commerce, store design and development, says. "That's why our first campaign was about food, because that has always been good. We just needed to remind people."

With 50 per cent of the company's turnover coming from food, a successful campaign from M&S's agency of record, Rainey Kelly Campbell Roalfe/Y&R, would be a big part of any resurgence.

An ad featuring its Belgian chocolate pudding saw sales of the dessert increase by 3,300 per cent, with stock running out in 48 hours.

In summer 2005, M&S moved its focus to its Autograph menswear range with the "comedians" press and poster campaign, photo-graphed by David Bailey.

By autumn, the company believed its womenswear collection was strong enough to release and backed it with a campaign featuring the models Twiggy and Erin O'Connor. Womenswear saw a sales increase of 3.3 per cent for the period the campaign was on air and M&S's share price climbed to more than 400p.

"The company is definitely back on track and footfall has been steadily rising all year," Hinton says. "The shop is now working on an operating profit of 10 per cent, which is fantastic in the modern retail climate, where consumers are starting to rein in their spending."

The final part of the three-point plan will start next year when M&S refits its stores.

The degree to which the RKCR/Y&R campaigns have turned around M&S's fortunes is open to speculation, however. While ads may well bring customers to the stores, the product on sale has to be both of a high enough quality and fashionable enough to drive sales.

However, M&S, like most clothing retailers, is well aware that it is only as strong as its next collection. Both M&S and its ad agency need a successful spring collection and campaign, or the hard work of 2005 will be forgotten.

"We are acutely aware that we have got the styles wrong before and we are working feverishly to get the spring campaign right to ensure we're not a one season flash in the pan," Sharpe says.

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FASHION EDITOR - Lisa Armstrong, fashion editor, The Sunday Times

"The advertising has been hugely helpful. The product has improved immensely, but without the ads the perception of the store would have remained as it was: a tired old relic.

"The last ad campaign for womenswear was cringeworthy and consumers had lost a lot of faith in the brand, but this is being reversed.

"M&S should never try to compete with the lower end of the market, because that is not who it is and the ads show this - especially with the casting on the autumn womenswear range. The choice of Twiggy was inspired. She has massive appeal."

RETAIL ANALYST - Maureen Hinton, senior analyst, Verdict

"The ad campaign has helped, but there is no point having good ads if the product isn't right. It may increase the footfall, but if customers come in and don't find anything they like they will go away and not come back.

"Holding off with the ads until the clothing line was right was a very smart move on M&S's part and at the heart of the company's success.

"It spent the past year setting the groundwork for the revival and then executed it well this year.

"Another important move was hiring Kate Bostock, formerly at Asda working on George, as the head of womenswear. This has had a huge effect on the quality of the product."

CREATIVE - Ed Morris, executive creative director, Lowe London

"Advertising is only ever going to bring the horse to the water. If there is nothing backing the ads up, then it's never going to work. Fortunately, the company seems to have the product offering correct.

"The ads really stood out and were very effective in bringing integrity and credibility back to the brand. I think it was a very successful campaign.

"The challenge now is to keep the quality of the content up and keep on delivering perception-busting work. It will be a tough job."

CLIENT - Steve Sharp, executive director, marketing, e-commerce, store design and development, M&S

"We are traditionally thought of as not being an advertiser, so to put this much faith in the communications strategy was a big move for us.

"The bid process and the sales decline had shaken the confidence of the shareholders and the customers, so we needed 'Your M&S' to rebuild that confidence.

"All of the ads have done this, as well as having an immediate effect on sales. But we have to remain aware that we need to keep repeating this success next year."