Customers are the heart of our business, so it is vital that we understand what they want from M&S. Our Customer Insight Unit (CIU) uses a combination of market research and customer feedback to help us understand how our customers think and identify the factors that influence their shopping behaviour.

Market overview

During 2012/13 there was little economic growth in the UK, with a Gross Domestic Product increase of just 0.3% in 2012. Vacancy rates remained high and over the course of the year a number of well known retailers disappeared from the high street.

Rising energy costs and petrol price increases further squeezed household budgets this year. As the gap between pay rises and inflation widened, incomes were further eroded by benefit cuts and the removal of certain tax credits.

The market was adversely affected by unseasonal weather conditions during 2012/13. The early part of the financial year included three of the wettest months on record and the UK experienced the coldest March in over 50 years.

These factors contributed towards a market footfall decrease of 3.7%. Retailers fought hard to win consumers' spend and there were continued high levels of promotional activity on the high street.

There were genuine moments of national celebration during the year and The Queen's Diamond Jubilee and the Olympic Games lifted the nation's mood. However, the feelgood factor they generated proved fairly short-lived and did not translate into higher retail sales.

How is this affecting our customers?

Consumers have become used to navigating choppy economic waters and confidence levels continued to improve as a result. However, high profile administrations – coupled with the ongoing threat of a triple dip recession – meant this confidence remained fragile and a sense of caution prevailed.

With the unique national celebrations finished in the early part of the year, customers attached greater significance to traditional events and family celebrations. They were determined to make these occasions truly special – making their time with friends and family more memorable.

Health and wellbeing also featured prominently in consumer priorities this year. They looked to retailers to help make living a healthier lifestyle more enjoyable and affordable, with less emphasis on dieting and more focus on delicious and nutritious quality ingredients.

Trust was also an important issue within the food industry this year. Customer concerns about transparency and traceability in the meat supply chain prompted a move towards quality food retailers.

Ultimately, consumers wanted to feel every purchase they made was worthwhile – adding genuine value to their lives. As a result, they looked to retailers to inspire them and provide clear reasons to spend.

How are our customers shopping?

With shopping trips restricted and budgets limited, customers told us that they wanted to enjoy their shopping experience, in a stress-free and inspiring environment. They wanted to feel valued by retailers and great customer service was a key consideration for shoppers. As a result, we invested further in our service proposition – delivering new training to our store employees.

Over the last year, any growth in the market has come from online, as more customers shifted to shopping across multiple channels. As a result, they expected retailers to join up their different shopping channels and provide them with a seamless experience and service whichever way they chose to shop.

The continued growth of smartphone and tablet ownership meant mobile devices became an even more influential browsing and buying tool this year. This growth has not only made it easier for customers to shop on the move but it has also altered their behaviour at home, with the rise of 'second screening'. This trend, whereby more customers are watching TV with a mobile or tablet device in hand, has proved to be a valuable opportunity for retailers to engage directly and provide consumers with reasons to interact with their brand there and then. Our marketing activity responded to this trend, as explained in Our Brand.

Consumers' purchasing decisions were increasingly influenced by how quickly and easily they could receive their goods. As more retailers launched and improved next day delivery options, customers' expectations were set even higher. Customers now expect flexible and tailored choices for both ordering and delivery as standard and we worked hard to improve our Shop Your Way service, as explained in the Multi-channel section of this report.

How we have responded
Area Impact Response

The clothing market remained flat this year and was impacted by unseasonal weather. Limited consumer budgets, meant womenswear in particular continued to be extremely competitive and very promotionally driven.

Many consumers deferred their shopping trips, deciding to 'make do' with their existing wardrobe, unless they were presented with compelling reasons to buy.

We established eye-catching 'trend zones' aligned to our advertising campaigns in stores, giving customers ideas on outfit building and enabling them to clearly identify the right products for them.


The static housing market meant sales of big-ticket items such as furniture remained depressed. Consumers increasingly used stores as 'try before you buy' showrooms to make purchasing decisions, but used online methods to purchase – avoiding additional distractions.

With continued emphasis on family and socialising at home, customers looked for inspiration and affordable style, as their focus remained on smaller-scale projects to refresh and update their homes.

Our new inspirational roomset layout delivered a real wow factor in stores, showcasing statement pieces of furniture, homeware and accessories from our collections. We also featured stylish room ideas on our website, Home catalogue and on the new M&S Home iPad app. Furniture sales increased as a result.


Driven by commodity and fuel price increases, inflation continued to be the principal factor affecting the food market. Competition amongst retailers remained intense, with high levels of promotional activity. In the wake of the supply chain issues, trust and traceability became a priority for customers.

Customers continued to demand good value food, but also expressed renewed commitment to healthy eating, particularly in the New Year. They looked for a stress-free shopping experience, with clear promotions and quality they could trust.

Our Simply M&S range caters for customers seeking affordable quality and we continued to extend our Health offer, with a brand new range – Delicious and Nutritious. Our reputation for exceptional food provenance served us well this year and we reminded our customers of our longstanding relationships with British farmers who share our values and commitments.


In a challenging market, dependable established brands continued to benefit. The well publicised issues in the food supply chain further fuelled a migration towards quality, trusted brands.

With a limited budget available – consumers turned to brands they trusted to deliver genuine quality. They wanted every purchase to make a difference to their lives.

Our marketing activity highlighted the quality and innovation that sets M&S apart – both in Food and Clothing. We used a broader variety of models so customers could see how the latest styles would make a difference to their wardrobes. Our food campaigns showed how M&S Food can make ordinary occasions special.


This year online and mobile channels continued to play an increasingly important role in influencing shoppers and determining their purchasing decisions.

Customers were looking for integrated, effortless shopping experiences that allowed them to make well-informed choices and buy in the way that suits them best.

This year we better integrated our shopping channels – bringing the latest digital technology into our stores. We launched our first transactional iPhone app and added new browse and order points to our stores. We rolled out over 1,500 iPads to our employees – helping to offer a more personalised service.

International marketplace

GDP continued to grow in our priority markets of Russia, the Middle East, India and the Shanghai region of China. Trading conditions continued to be challenging across the Eurozone, particularly in Greece, Spain and the Republic of Ireland.

We believe most trends are global and our UK catalogue is the core of our international offer. Careful editing ensured that our collections remained relevant to the slightly younger age profile of our international customers. We also responded to a variety of international demand trends including increasing local garment sourcing in India. This has resulted in faster speed to market, improved margins for us and better choice and fit for the customer. We also introduced better phasing of outerwear in Russia to capture the market earlier in the season when demand is highest.

Our British heritage and brand values are key assets for M&S in international markets. A heightened appetite for all things 'British' was particularly apparent this year, as global attention focused on The Queen's Diamond Jubilee and the London Olympics. These events presented us with the ideal opportunities to showcase the best of M&S and differentiate ourselves from local competitors.

As part of our strategy to become an international multi-channel retailer, we launched websites in Germany, Spain, Austria and Belgium, extending our reach into some of the fastest growing online fashion markets in Europe. Making the most of London's status as an international fashion capital, the launch was themed around showcasing the very best of 'London style' – from our catwalk-influenced Limited Collection to the craftsmanship of our Savile Row Inspired tailoring. M&S' British heritage will continue to play a leading role in our international marketing activity.

How Plan A helps us respond

Plan A – our eco and ethical programme – sets us apart as a leader in the marketplace and helps us tackle the sustainability issues that face all major retailers.

With key raw materials and natural resources under increasing pressure, we continued to develop a more sustainable supply chain, focusing on areas such as cotton and sustainable fishing. Our long-established strict sourcing standards meant M&S did not need to withdraw any products as a result of the supply chain issues.

In a challenging economic environment, Plan A also helps us to run a more efficient business, through reducing waste and energy use. We continued to share our experiences with suppliers – enabling them to reduce their own manufacturing costs and create a more sustainable future.

This year we launched new ways to engage our customers in Plan A, with exciting initiatives such as Shwopping and our Big Beach Clean-Up.

Looking ahead

Customers are pragmatic about the future, realising that economic recovery is still some way off. However, they are gaining increasing confidence, thanks to their ability to manage through these difficult times and remain focused on spending wisely and well with retailers they trust.