Marks & Spencer (M&S) is making a lead for expansion in the international markets. The brand will adopt e-commerce route which the company estimates that it will give Britain’s biggest clothing retailer a better chance to succeed than earlier attempts.
It is one of several retailers using expertise developed in the UK’s fast-growing e-commerce market to expand overseas. Store chains like M&S are starting to emulate the success of online-only fashion players like ASOS.
Britain is the world’s most developed online retail market, according to a ranking by commercial real estate firm Cushman & Wakefield, followed by the US, Germany and France.
Britain’s leadership position in e-commerce has been driven by its compact size — making delivery more cost-effective — with its relatively high internet penetration.
Retailers are seeking to ship more goods to shoppers abroad, a drive the British government is supporting to diversify exports from a heavy reliance on finance. It launched a plan last year to help 1,000 retailers break into international markets by 2015.
Consultants OC&C say UK retailers are beating domestic competition overseas due to wider choice, better prices and fast and reliable delivery. They predict overseas online sales by British retailers will jump to £28bn by 2020 from just £4bn in 2012.
“You can go quite a long way with one warehouse serving the world. We should feel confident about the prospects for a nation of shopkeepers with an advantage in the digital world,” said OC&C partner Anita Balchandani. M&S is investing £1bn in logistics, IT and systems. It launched a web platform in February and is ramping up a distribution centre in central England to fill online orders.
It hopes that it will help reverse nearly a decade of market share decline at home and pay dividends abroad as it targets a 25% increase in international sales in three years and a 40% rise in overseas profit.
There was a 13% rise in overseas customers searching for UK apparel retailers online in the first quarter of this year, according to a British Retail Consortium and Google study, with growth strongest in China, Russia, France and Germany.
Nine local M&S websites are already live, with plans to launch in Russia and Finland this year. M&S also hopes to add 250 stores abroad by 2017 to the current 455, including new lingerie and beauty boutiques in Saudi Arabia and India.
It already delivers to countries including Australia and Canada from its UK warehouses, a similar strategy to that pursued by Next whose strong online growth has helped it almost catch up with fashion sales at M&S.