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It's all Greek to M&S
Feature: 3/1/2002

Marks and Spencer's costly retreat from Europe last year appeared to mark the end of its exploits on the international stage. But the performance of the company's last major continental operation, in Greece, shows that this most British of brands can be successful abroad (director-e News, Tuesday 15 January).

Its 27 franchises in Greece are described as the company's "star performers" and the franchise system is now seen as the key to future growth.

While M&S was incurring £100 million in losses in two years from its wholly-owned operations in countries such as France, Germany and Spain, the Greek franchise network was working to a smaller and more profitable blueprint.

M&S's European operations began in the glamorous environs of Paris in 1975, but ended in retreat in Spain this month as it sold off the last of its wholly-owned stores to Spanish retailers El Corte Ingles.

M&S Greece has not been immune to the fortunes of its parent company, though. In the same way that M&S's success in Britain fuelled initial expansion in Greece, hard times in the UK stigmatised the franchise partners.

"A lot of people thought that we were also going to close too", sales manager for M&S Greece Anita Sabarwal says. "We had to inform customers, say to them 'here's a new collection, we are still doing well here in Greece' ".

Echoing UK traditions

In some respects the core of the Greek business echoes UK traditions with M&S underwear firmly established in the national consciousness. "The quality you get for the price you pay is good value", says Mrs Gianopoulos, shopping at one of M&S's Athens stores.

Ms Sabarwal feels that a fresher, more fashionable approach is what customers want all over Europe. "Instead of a bunch of trousers in a row they want to see outfits. The concept is go and buy an outfit, not a black pair of pants".

M&S's European rise and fall has been a story of the wrong-sized footprints. In the retail world, size matters, and the square-footage of the stores, known as their footprint, was just too big in their European subsidiaries.

"We were operating from the wrong platform", admits Louis Hill of M&S in the UK. "The average footprint of our wholly-owned stores outside the UK was 40,000 square feet, while it was only 8,000 for our franchises".

Those wholly-owned M&S stores with their larger footprint became serious loss-makers under UK management. In contrast, the franchises where M&S provides the products and takes a cut of the profits, have proved to be a low risk winner in partnership with local retailers.

"The Greek franchise has been our star performer", says Hill. "On an international level we are now focusing on franchise, it will be our platform for growth".

Size and fashion

Marks and Spencer arrived in Greece 12 years ago, when local retailers, the Marinopoulos brothers, bought the franchise. Ms Sabarwal believes their continued success is founded on two things - store size and fashion.

"The Greek customer is very fashion influenced and very stylish in effect. They like to co-ordinate accessories and dressing up", she says.

The Greek emphasis on fashion has foreshadowed much of the new strategy underpinning an upturn in the fortunes of M&S's UK business. "The importance of fashion is nothing new to us", Ms Sabarwal claims.

"These are things that we've been doing for four or five years and now the UK has come along and said they are going to lay out their stores like this. In Greece M&S is not considered the most fashionable shop. The section of the market for M&S is classic.

"However, there's a difference between classic and classic. You could bring all of the really classic merchandise from M&S and then nobody would walk into our stores. Since we are already considered classic, we target the more fashionable end of that market", she adds.

The annual turnover of M&S Greece, from 27 stores, tops £40 million, making it both their largest single operation and one of the fastest-growing. Expansion continues at a rate of over three stores per year.

"There was a point about two or three years ago when M&S from the UK were telling us that we should go for a bigger footprint as well", Ms Sabarwal admits. "But we didn't do it across the board because we realised that it was too big to be efficient".
Author: John Gibbon
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