Marks & Spencer (M&S), the high street giant, has announced its plan to shut down 11 cafes in its small food stores. This step is part of a larger, sustained transformation of its huge retail estate and, within a wider strategy of a £300 million investment and store rotation programme. This strategic plan is to modernise the food business and add more to the services of M&S Food to a broader customer base, more often. The essence of the reuse of the cafe space in these particular locations is to create room to display a wider range of popular products, hence maximizing the sales potential of the selling space.

Commitment to investing in its store estate

The high street giant made the decision official on a Monday, explaining that the closures only impact an incredibly small proportion of its total food retail presence. In particular, these 11 cafes which get closed affect less than 4% of the 316 food shops of the group that exist. This restructuring does not only concern the reduction of assets not performing well, but rather a strategic move towards achieving a considerable increase in the total number of M&S food halls.

The long-term vision of M&S is to increase the number of food stores to around 420 stores by the final year of 2028, which puts a strong emphasis on the development and modernization of its food division. The rationale behind the closure of these specific cafes is the wish to maximize the use of the retail space in the smaller food stores where customers have shown interest in increasing the variety of M&S Food products.

M&S spokesperson highlighted how the company is investing in its store portfolio to make sure that its customers are able to enjoy the maximum range of products. The former cafes will be turned into a retail section to carry the more successful lines of food in direct response to the customers’ demands to have more options in their local small M&S Food stores.

The strategic shift is only in the 11 locations and is not a move out of the coffee shop business altogether. M&S affirmed that it is in the process of opening new brand coffee shops with spectacular food service and Fairtrade coffee made by baristas.

An M&S spokesperson said, “As we look to modernise our food business and offer the best of M&S Food to more people, more often, we’re investing in our store estate to give our customers the widest possible product range.”

Quotation Source: startupnews.fyi  

Retention of employees and financial backdrop

One of the most important guarantees that has been offered by the high street retailer regards the effect on the workforce. M&S emphasized that it will not reduce the number of jobs directly because of the 11 cafe closures. Employed employees in the affected cafes will receive the same roles and be redeployed to other positions in their respective stores.

This dedication to retention means that the restructuring process will be conducted in a way that will not cause unemployment and make it easy to resettle the human resources within the increased food retail areas. The entire store rotation programme of £300 million deals with various aspects of the M&S retail estate. It also involves the transformation of part of the full line stores of the business (which also sell food and clothing, and home) into food stores.

Other already existing food-only stores are being capital invested in to modernize their operation so that they can be more efficient and well-equipped to cater to more customers. The success of this multifaceted investment and store rotation approach is the foundation of the long-term plan to expand the number of food stores to 420 by 2028.

The implementation of this overall shake-up and investment programme is against a backdrop of the retailer in its continuous financial recovery after a major cyberattack. In April, the company suffered a huge cyber attack, which made the company halt online orders temporarily for six weeks.

The high street giant then announced to its investors that the hack, initially reported to have been verified around Easter Sunday, was expected to cost the business a financial loss of about £300 million. It is notable that the shake-up of £300 million, which denotes the investment and store rotation programme, is different to itself as compared to the expenditure of £300 million in the cyberattack.

M&S is controlling the huge financial resources in a time of great strategic change and healing. The willingness to continue the large-scale investment programme despite the financial setback of the cyberattack speaks to the firm being dedicated to its modernisation efforts with regard to the physical store presence and the further development of its food business as one of the key accelerators of new growth.

Conclusion

The closure of the 11 cafes in smaller food shops is a tactical move in the broader £300 million investment and store rotation programme by Marks and Spencer. Through the reuse of this space, M&S will improve its product offerings in these areas, which will satisfy the demand of customers to get a wider range of M&S Food. This is a specific action that does not involve job losses by redeployment of staff but rather a bigger initiative to modernise the food division, transform full-line stores, and eventually achieve a total number of about 420 food stores by 2028.