As a Dutchman, Marc Bolland was disappointed that Spain beat his national team in the World Cup final. But as the new Chief Executive of Marks & Spencer (M&S), Britain’s iconic retail business, he is very happy with the outcome.
Bolland is fanatical about soccer – even acting as an adviser to the top Amsterdam club, Ajax – and ensured the England players wore matching M&S suits when they proudly flew to South Africa (and when they less proudly returned). Linking the retailer to the hugely popular soccer tournament boosted business, says the 51-year-old Bolland. “That got us 5,000 sold as a replica of that suit,” he adds in his imperfect English. M&S also had strong sales of televisions, not a traditional line for a stores group best known for clothing and food.
And the soccer helped beer sales – another untraditional M&S product. Until recently the company sold only its own foods but it is now gradually adding branded goods and promotions by big brewers stimulated sales for M&S’ own-label beer. “When we did an activity for branded beers we saw a halo effect with the M&S beer being bought as well,” he explains. “We’ve never sold as much M&S beer.”
Bolland knows as much about beer as he does about soccer. He spent the first two decades of his career at Heineken, eventually becoming Chief Operating Officer of the Dutch brewer. In 2006, he left to become Chief Executive of Morrisons, the UK supermarket group that had acquired the much larger Safeway in Britain. It was Bolland’s successful integration of the chains that made Marks & Spencer poach him to replace Sir Stuart Rose.
A GENEROUS PACKAGE
It was an expensive recruitment however. Bolland arrived in May with a package that could pay him £15 million and the deal attracted criticism at the annual shareholders’ meeting. Rose, who remains chairman in the short-term, has no hesitation in defending the remuneration however. “If the company does well, Marc will do well,” says Rose. “We live in a market economy.”
Yet Bolland is operating in a very difficult economy. He had been in his new job only a month before the UK government raised value added tax on sales from 17.5 to 20 percent and implemented an austerity program that will freeze wages for many, lift unemployment and reduce consumer confidence. The outlook has made Bolland extremely cautious for the future.
Fashion, the stores’ mainstay, is the line most vulnerable to the tax rise. “In my third week in the building we selected the ranges but we’ll buy into demand,” he says. “We want to be comfortable with our stock position, so we have a very prudent approach to stock management and our buying process.”
The 125-year-old group has a unique position in UK retailing and its middle-market customers are quick to criticize when management gets it wrong – as many of Bolland’s predecessors have.
Fashion is a new experience for him and he is keen to know not only what his shoppers think but how they will react to fast-changing economic circumstances. His early weeks were buffeted by the World Cup, the budget and Britain’s volatile summer weather so, not content with outside advice, he has initiated his own intense program to test consumer attitudes. “To make sure that we’re not only relying on external information we have started a very strong consumer barometer ourselves which we are conducting every month and which is extremely large research round the country to measure consumer confidence and measure consumer behavior,” he explains. “It will indicate to us, going forward, the measures that we have to take.”
He set-up the program as soon as he arrived, conducting the first research before the government’s tough budget, but despite subsequent tests of opinion he remains cautious about it means. “We do not believe that the first results are the only indicators to drive on,” he says. “We want a bit more research done.”
COMPLIMENTARY ONLINE BUSINESS
As a ‘foreigner’, Bolland is well-placed to look beyond Britain. M&S has blown hot and cold on overseas expansion, opening branches in Europe in 1975 and closing them two decades later. In 1988 it bought Brookes Brothers, the New York outfitter, and King’s, an American supermarket chain, but it sold both over the past decade after disappointing results. Now Marks is expanding abroad again, often in partnership with local owners, but Bolland has another way to export Marks’ success.
His online business was designed to complement the 600 UK stores, but after using the U.S. and Canada as guinea pigs to test selling directly to customers abroad, Bolland has rolled out the service to 73 countries worldwide. And his traditional customers unused to the internet can now order by telephone too. “We’ve now added the opportunity to buy on the phone and we’ve had 55,000 people visiting our site,” he boasts. “We know we have something very powerful on our hands. The first double-bed has been bought by phone!”