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The company I have chosen for my report is Marks & Spencer. It ranks as the biggest clothing retailer in the U.K and 43rd largest in the world. It primarily sells clothes, foodstuff and more recently furniture, gifts and household items. It operates through more than 900 stores in around 43 territories. Its clothing and home ware products account for almost 49% of their revenue. It is built around the five key principles of Service, Value, Trust, Innovation and Quality. Its shares are listed on the London Stock Exchange as well as the FTSE 100 Index.
Marks & Spencer was formed as a partnership between Michael Marks and Thomas Spencer on 28th September 1884. It started with selling common groceries like needles, socks, biscuits, thread and buttons through its "Penny Bazaars" with the caption "Admission Free" persuading consumers to glance through without making any commitment to purchase, and although it is common now, it was unheard of in those times and was looked upon as a successful marketing tactic. It helped boost their initial sales and by 1900, it had opened 35 more Penny Bazaars.
Then, in the 1920's, it reinvented itself and started developing products more suited for life's essentials such as clothes, under garments, bulbs, heaters, etc. Towards the 1930's, it started selling clothes under the 'St Michael' brand, as a result of its entering into long term relations with British manufacturers. It was one of the first retailers to fully refund the return of unwanted items if the receipt was shown, without considering the date of purchase. In 2009, the return policy limit was changed to 35 days.
In the 1970's, eyeing an opportunity to sell convenience eatables due to swiftly changing lifestyles, it was one of the first British retailers to introduce boil-in-the-bag/ready-to-eat Indian and Chinese meals.
M&S is managed by a set of well-qualified and educated board and executive committee. Currently, the executive chairman of the company is Sir Stuart Rose who was appointed in May 2004.
The company faced a depression period from 1973-2000, mainly because some of the stores in overseas markets were not as profitable as the British ones, most stores were undersized and did not carry a similar selection as compared to their British counterparts. One of the major factors was that the company did not allow credit cards to be used except for its own M&S card. More than 45 stores overseas had to be closed as they were not functioning as per expected levels in 1999.
It is said that during this period, when Richard Greenbury was the chief executive of the company, profits of the company declined at a rapid rate and customer loyalty also diminished even though he was one of the main reasons why M&S had a strong hold over the British clothing mainly during 1990-1997, during which M&S's market share which was almost twice as much as any other clothing brand name. It was during his period as chairman and chief executive, that M&S share prices were at their highest, and the company undertook various other profitable ventures, and expanded internationally.
Then, in 2001, M&S came up with changes in its operations such as credit cards were now accepted, introduction of new clothing ranges such as per una, autograph, and many more. Peter Salsbury was appointed as the new chief executive officer, successor to Richard Greenbury. These efforts resulted in M&S regaining some of its market share, and recovering its declining profits.
In 2007, under the leadership of Mr. Rose, M&S announced the opening of their world's biggest M&S store outside the British Isles, in Dubai covering almost 65,000 square feet which also features a bakery, with muffins, cakes and different types of fresh breads.
Corporate Social Responsibility
M&S believes that building good relationships with its suppliers, society and its consumers is vital and helps create better value for its shareholders. For M&S, it reflects the way they conduct their business and takes into consideration their core values. More than 75% consumers said that they would like to know how M&S manufactures its products, the standards used for animal welfare, the quality of materials used, the level of wages paid to its suppliers, producers, etc.
Therefore, in 2006, M&S launched a program called the "Look behind the Label" program, which was a joint effort by its communications and marketing department, in order to tell its consumers that how their products are processed, etc. Through this campaign, M&S was able to reach out to its customers and the company sees this as a continuing campaign because of the positive feedback from its consumers and employees.
The company has also shown obligations on equal opportunity to all people & not on the basis of age, race, disability, gender, etc. It has published reports which show that around 30% of its employees are aged over 50 and that majority of its employees, more than 65% of managers are female, and more than 77% of its employees are female.
In 2004, M&S was positioned as the top retailer according to the Dow Jones Sustainability Index for the 3rd consecutive year. It was also named as 'Company of the Year' by 'Business in the Community' in 2005.
The company is actively involved in ensuring that their consumers are fully aware of their responsibilities towards the society as a whole and, as a result, release CSR reports every year showing what they have achieved through their strategies and plans, and what they plan to do in the near future.
Now, I will be talking about a few of the many ethical practices followed by Marks & Spencer.
Plan - A
Plan A is an initiative launched my Marks & Spencer in 2007, with the goal to become one of the world's most sustainable retailers and is likely to cost around $300 million.
The basic five 'Plan A' pillars are:
- Waste - Refers to reducing constructional and operational waste that is sent to landfills each year.
- Fair Partnership - Ensuring that M&S's clothing suppliers pay fair wages and ensuring that laborers live in proper conditions in countries like India, Sri Lanka, etc.
- Natural Resources - Ensuring that raw materials do not come from sources that contribute to deforestation.
- Health & Well-being - Promoting healthy lifestyles for their employees & consumers.
- Climate Change - Refers to reducing energy usage by almost as much as 40% and become carbon neutral by 2012.
Through Plan A, M&S has invented and developed new ways of producing products in a more environmentally friendly way, and developing more eco-friendly products for its consumers to help them lead healthy lives. The plan initially consisted of 100 obligations to be covered in 5 years and has recently been increased, to around 180 obligations to be completed before 2015. This plan addresses the vital social and environment related dilemmas faced by the company.
In order to initiate Plan A, M&S launched its own reusable paper bag in 2007, in hope that through this step, they will be able to reduce the usage of plastic bags over the next 5 years. In order to further discourage the use of plastic bags, M&S started charging 5 pennies per bag to every consumer in May 2008. This move alone saves around 450 million plastic bags each year.
M&S still continues with the plan even though its share price fell more than 15% in 2008. When asked, the company stated that there were far more important concerns to continue with Plan A including moral as well as commercial concerns. Further, the company has assured the public to reduce water wastage by 20% and plastic bag usage by 35% in the near future.
Other Ethical Practices
- Fairtrade - It is a product certification system which has been designed to help consumers to identify those products that meet agreed labor & environmental standards. These certified plantations ensure consumers that safety requirements have been met and that there has been no sort of forced or child labor. Many products have been launched under the fair-trade certifications including coffee, tea, jams, and recently, bed linen, vests and many other clothing ranges. Achieving this, M&S became the first major UK-based retailer to launch clothing made out of Fairtrade certified cotton.
- Genetically Modified Food Products - In 1999, M&S stated in a press release, that it would be removing all genetically modified products or products that contain GM ingredients or derivatives off its stores all over the world. This was a bold move for M&S as no other retailer had done this before and it could risk losing profits, but the company stated that they wanted to ensure that their consumers consume animal-based food products that are fed a non-GM diet.
- Eco-Friendly Ways - M&S has come up with many innovative ideas and products for its consumers to help them become more eco-friendly and develop healthier lifestyles. It has adopted the same methodology in the building of its stores such as using natural rubber instead of traditional wooden flooring, and powering some of their own stores through windmills which helps reduce their dependence for non-renewable sources of energy. It has also been using rainwater harvesting in order to help achieve their goal to reduce water wastage by 20%.
- Animal Welfare - M&S believes that guaranteeing excellent standards of animal welfare is vital for them and that is what they want to achieve right through their supply process. The company stopped selling of Indian leather goods in most of its stores since 2001, after PeTA criticized M&S for ill-treating the animals before slaughtering them. In 2007, M&S won the RSPCA's award for the third time, for leadership in effectively managing animals.
M&S is strongly against suppliers or any other companies that conduct or fund tests of different types of products on animals. All of M&S's house hold and beauty products have been approved by BUAV under the Humane Cosmetics Standard as it follows a strict animal testing code of practice which ensures that certain rules and regulations are followed throughout the supply process down to the ingredients from its suppliers.
* Food Packaging - M&S has been criticized in the past for its packaging, with many people saying that its products weigh much heavier than its competitors like Tesco, Waitrose etc and that even though the company states that most of its products are fully recyclable, a survey was carried out which showed that only 63% of a particular M&S product was recyclable. M&S responded to this by saying that the survey was done on only a few of its products, and stating that more than 90% of their packaging can be recycled.
M&S has implemented many of its sustainable strategies in the packaging of its various products. In 2005, it started working on increasing the recycled content in its packaging to as much as 60% for its snacks, and as much as 35% for its drinks, and making sure most of its packaging is recyclable as well as ensuring that their products are safe while being transported. Following this, when a recent study was conducted, more than 75% of consumers said that they feel 'positive' when they learn that a brand uses recycled materials.
Moving on, M&S sells its sandwiches in cardboard packs that are manufactured from forests that are well-managed instead of using plastic packaging like its rivals. Moreover, the clear window on the cardboard pack which is used for letting the consumer know which sandwich he/she is buying is made from biodegradable cornstarch.
Now, I will be talking about another company in the same industry and compare it's practices with that of Marks & Spencer PLC. The company I have chosen for my comparison is Sainsbury's, which is among one of United Kingdom's major retailers. The company's operations are similar to that of Marks & Spencer and this is one of the main reasons as to why I have chosen this company for my comparison.
It runs United Kingdom's third biggest supermarket chain with a market share of almost 20%. It not only operates as a supermarket chain but also as a bank and provides a wide range of financial services like loans, credit cards, etc. This bank was the result of a common interest among Sainsbury's and that of Bank of Scotland which operates as a subsidiary of the Lloyd's banking group and was opened in 1997. The bank has over 2 million active consumers.
Sainsbury's operates more than 800 stores which consist of convenience stores and supermarkets, according to its store portfolio of 2009. Additionally, it also operates 'Sainsbury's Online' which is an online service through which shoppers can choose the groceries they want to purchase and then these groceries are delivered to them by a van. This service is available to almost 80% of United Kingdom's population.
Firstly, I will be comparing the quality of the products sold by Sainsbury's and M&S.
- Packaging - Sainsbury's still uses plastic bags for the selling of its products at an average of almost 12 bags to pack 34 products, unlike M&S's bold yet effective move which has started charging its consumers 5 pennies for each plastic bag they use. This has enabled consumers to understand the harm they are inflicting upon the environment by using these bags as they not decomposable and simply add waste to landfills which in turn affects us only. Moreover, M&S has also incorporated the use of recycled materials in its packaging and stating that more than 90% of its product's packaging is recyclable.
- Clothing - M&S's clothing range is made of Fairtrade certified cotton which ensures consumers that its clothes are made in safe and controlled conditions without using forced or child labor. The usage of fair-trade products means that certain compulsory standards have been met, which includes having small farmers have an opinion in how their money is invested, and also that the labor is paid adequate wages and not under-paid.
By this comparison, we can conclude that M&S's way of doing business is much more ethical than that of Sainsbury's, and it does not only aim for soaring profits and have therefore planned to go on with Plan A even though the company has faced financial setbacks. This goes on to show that being ethical is more important to M&S than just earning big profits.
As I have already mentioned previously about Plan A, the company has met many of its 180 obligations and is still going strong even though it risks losing market share and revenue. Through Plan A, M&S raises almost $20 million each year for charitable organizations, based on fighting against cancer and helps reduce poverty.
Moving on, Sainsbury's has been criticized in the past for it service with many people saying that their staff does not know a lot about its products. In one incident, when a consumer asked the sales person as to "why the bags for life was for free", these bags are made from recycled materials and Sainsbury's will replace it with a new one if the former gets worn out, the sales person said that "she didn't know."
On the other hand, M&S ensures that it staff goes through proper training and trainees are closely-monitored to see the type of job they are best suited for, and accordingly, given an appropriate job. Employees are taught about the ethical codes of practice and many other vital programs. This goes on to show that how dedicated M&S is in its responsibility to its society and its people. In a recent survey by Ethical Corp, M&S's staff proved to be more cheerful, always ready to help, and knew a great deal of information of their respective departments, than to those compared at Sainsbury's.
As we all know, no company in the world can be completely ethical or unethical. Therefore, now ill be talking about some of the unethical practices of M&S.
M&S has been criticized by War on Want for paying low and unfair wages to its suppliers in Third World countries like India, Sri Lanka, etc. Reports have shown M&S had paid as low as almost $75 a month to laborers. Their salaries only helped them cover basic expenses like rent and common provisions.
They were also accused for providing bad conditions for living as rooms were too small to only fit a bed and a table, common showers in open places had been used, etc. They were also forcing laborers to work for overtime above the legal limit which is 60 hours per week. Sainsbury's was also accused on similar grounds.
Even though there may not be a lot of unethical practices followed by Sainsbury's, it has still not taken effective and large-scale measures to become eco-friendly like M&S. The company's 'Plan A' initiative is one of the largest of its kind, and proving to be effective which is apparent from the reports it releases every year to show the obligations it has achieved, and may as well go on to become the world's most sustainable retailer. Whereas, Sainsbury's still uses plastic bags which contributes to harming the environment and is increasing the amount of waste sent to landfills every year.
M&S has tried to improve its image because it is been blamed in the past for its actions in countries like India and Bangladesh where it paid low wages and forced its employees to work overtime above legal limits.
It has raised more than $2 million for breast cancer through sales of clothing, and other items. It is actively involved in using renewable energy to supply power to its own stores, and has begun buying more than 2.5 TWh of renewable energy which is enough to power almost one-third of its stores worldwide.
Overall, we can say that M&S is more inclined towards an ethical level as it has tried repeatedly to shed its bad image and launched many initiatives and campaigns to become one of the 'greenest' retailers. This has resulted with the company being recognized as a brand that is sustainable and is 'doing its bit' to help the environment.
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