Marks and Spencer (M&S) announced recently that it will close more than 100 outlets in the next four years. The giant retailer has already shut 22 stores and it’s planning to close 14 more by 2019. The company plans to close at least one out of three core clothing and food outlets as part of its strategy to streamline its systems to reduce the operating costs.
According to the company, restructuring is critical for the future of the firm that has been struggling with huge costs and falling sales and revenues. The move will lead to losses of thousands of job opportunities.
Workers are now waiting for their fate as the firm intensifies its radical transformation program to other stores. More than 1,500 out of the total 72,000 shop workers have already packed their tools. M&S, based in the UK has about 1,035 outlets with 300 selling clothing, food and homeware.
Tough Trading Conditions Prompting Firms To Close
For several years, business companies are increasingly facing tough working conditions in the business environment including the economic recessions, increasing operating costs, strict government regulations, rapid growth of technology and innovation, competition, strong supply-chain links, informed customers and much more.
Today, most consumers are selecting to do their shopping online because it’s convenient, affordable and have unbelievable discounts and other after-sales service benefits such as door-to-door service delivery.
Aggressive online retailers like Amazon, Alibaba, Wal-Mart and others have deepened competition among the existing retail stores. Most firms are progressively being threatened to shut down due to stiff rivalries.
Other Retailers Facing Closure
With continuous changes in the business environment, it’s becoming difficult for companies to balance between operating costs and sales revenues. Both small and large stores are endlessly being hit by the venom that forces them to opt for a cutback.
Recently, Mothercare also announced its plan to close about 50 outlets a move that will put more than 800 jobs at risk. In addition, Fashion Chain New Look and House Fraser are also planning to restructure their retail businesses to salvage their failing businesses. Sir Philip Green Arcadia, a retail empire in the UK may also follow suit in the near future since its sales have drastically dropped.
According to Archie Norman Chairman of M&S, the financial results of the company have been drifting for about 15 years. The feeble consumer expenditure has made the company’s share price to fall by a quarter for the past one year.