M&S has always been committed to being the first choice for fresh, high quality and convenient food that is ethically sourced. In achieving this, the emphasis in 2007/08 was firmly on provenance, healthy eating and innovation, as we reported continued growth for the year.

In the year ahead, as well as reinforcing these values, we want to stretch the brand further, so we offer our customers greater choice and convenience.

Performance

In 2007/08 we grew sales by 6.9% to about £4.25bn, reflecting the contribution from new space, with the launch of 98 Simply Food stores (including 64 BP stores). Strong performance in key product areas, realignment of prices on key product lines, whilst rigorously maintaining and improving quality, also played an important role.

Value market share for the year improved to 4.3%, despite increasing high street competition. In the next few years, we want to increase our market share to just over 5% of the total UK food market.

We plan to achieve this growth by opening more Simply Food stores; expanding the range of food we sell in all of our stores; improving the value and quality of our lines; maintaining our lead on innovation and quality; and enhancing our store experience and hospitality offers. We continue to respond to food trends, such as cooking from scratch; Fairtrade and organic; and health awareness through the reduction of saturated fats, salt, sugar, additives and preservatives.

A convenient offer

In the last year, we’ve responded to customer feedback by taking steps towards becoming a more convenient food shop. Our first step was to begin opening more stores in out-of-town and retail park locations. We’ve now also recently begun to broaden our product offer so that our customers can buy more of what they want at M&S, whether cooking from scratch; buying something partly pre-prepared; or picking up a ready meal.

As part of our commitment to delivering convenience and service to our customers, we will also trial up to 350 lines of branded food and household essential items in a number of our stores in the North East of England from summer 2008. New lines include Marmite and Heinz tomato ketchup, as well as other branded ‘must haves’.

Everyday value

As part of this move to be a more convenient place to shop, we have reviewed the prices of popular shopping basket items to ensure they are competitive. These items range from cornflakes and frozen peas, to flavoured whole roast chickens.

However, we firmly believe that low prices should never be achieved through a reduction of quality. So although we’re responding to market demand on pricing, we are doing so without any loss of M&S quality or standards.

The return to cooking

Great food starts with great ingredients – something our ready meals have long been famous for. Now with more of our customers spending longer in the kitchen, we want to make M&S the one-stop-shop for all of their cooking needs.

Our new ingredients range gives customers a choice of more than 300 new ingredients – from fresh herbs and spices like our lazy garlic and cinnamon, to bread and cake mixes – that make it easier to start cooking from scratch. And it’s easier still with the help of our M&S recipe cards.

When it’s in season,
it’s British.

The best of British

From that comfort food favourite, our outdoor bred Lincolnshire Pork Sausages, to our hand-made Somerset cheddar, we go to great lengths to source the very best speciality foods right on our doorstep. When it’s in season, it’s British.

M&S is the only major retailer to stock 100% home grown asparagus in season. We’ve been working with British growers to extend the season, so it lasts from April to July – almost double the length it was five years ago.

This not only gives our customers more opportunity to enjoy asparagus, but also enables them to support farmers like John Chinn – winner of the ‘2005 Grower of the Year’ award for innovation.

Additionally, all of our fresh beef comes from the UK, much of it from Scotland, and we’ve been working closely with Welsh farmers to extend the lamb season by a full two months. In 2008/09 we’ll introduce home-reared products to local stores, such as home-reared Oakham chicken in Scotland.

With no legally defined industry standard for free range pork, we decided to review all of the many standards and specifications, so that we could introduce our own ‘leading standard’. As a result we now offer in a number of stores truly free range pork, which is the first step towards meeting of our Plan A commitment to convert all of our outdoor bred fresh pork to free range.

All of our food is free… from artificial colours, flavourings, sweeteners and hydrogenated fats; as part of our commitment to help our customers eat well.

As of 1 April 2008 we became the first retailer to remove all artificial colours and flavourings from our entire food and soft drinks range. It has taken three years to remove artificial colours and flavourings from over 900 products, with some more difficult than others. For instance, finding a natural colour from fruit and vegetable extracts to replace the vibrant pink filling of Turkish Delight.

We’ve also made excellent progress in salt reduction, having reached our 2010 targets in 11 out of 15 categories, including ready meals and sandwiches.

The M&S food experience

Not everyone who eats in one of our stores is an M&S food customer. That’s why by improving the breadth of our in-store hospitality options, and achieving a balance between healthy eating and indulgence, we’re able to introduce new customers to our food. In fact, we’re one of the UK’s fastest growing hospitality providers, with over 12% like-for-like growth in the last year.

As part of our store modernisation programme, in 2007/08 we increased our in-store hospitality offer to create a repertoire of unique breadth and quality. We now offer five in-store hospitality options, including 239 cafés, 5 restaurants, 7 delis, 34 Hot Food to Go counters and 2 M&S Kitchens.

Within these new formats we’ve stretched the brand even further, for example offering kids meals in our restaurant, as well as steaks cooked to our customers’ preference. Our deli bars also offer the option of a glass of champagne and a greater volume of fresh (and raw) ingredients, such as freshly prepared salads.

Internationally, we look forward to opening an M&S Café in our new Shanghai store.

Looking ahead

In 2008/09 we will continue to grow our food business in line with consumer trends for cooking from scratch and healthy eating, and our programme to open more space.

Provenance and ethical sourcing remain high on our agenda, and we expect the Best of British range and our expanding Eat Well range to help us make further progress in attracting a younger customer. Our Simply Food business is important here, and will work alongside our hospitality business in helping broaden our customer base.

Our move to become a more convenient food shop is of increasing relevance, as we expand our ingredients and introduce branded food and household items.