With Philip Green circling, Stuart Rose must deliver a convincing strategy says Liz Hamson

According to TNS Superpanel data, sales figures haven’t been that bad.

Ed Garner, TNS Superpanel communications director, says: “They’ve been flat - nothing to ring any particular alarm bells.” However, he adds, the decision to adopt the same limited range formula in the high street as at railway stations was fatally flawed.“It’s the sort of place to go for treats. The format is very specific to certain locations and shoppers,” he says.

Others agree that Rose needs to ditch the one-size-fits all strategy and get to grips with the fact many shoppers expect a different convenience offer in town centres and cities than they do in railway stations and regions.

The pressure is on. When Marks & Spencer chief executive Stuart Rose outlines his plans to revive the group’s fortunes on Monday, he will be doing so in the full knowledge that if he fails to deliver, he may well be playing the group straight into Philip Green’s hand.
In the extraordinary battle for M& S, neither last week’s announcement that it is to squeeze £100m-a-year price cuts from suppliers, nor the carefully worded decision by the board on Thursday “not to recommend” a £9.1bn offer from Green, have halted the billionaire entrepreneur’s stalking horse - or distracted attention from the salacious sub-plots of share dealing impropriety and intercepted phone calls.
Monday is Rose’s big chance to seize the initiative and demonstrate to shareholders he is the best man for the job.
Having already declared the group needs to restore its value proposition by focusing on “product, product, product,” he is expected to unveil a top-line vision that clarifies the group’s clothing strategy, officially confirming that Per Una will not be rolled out to standalone stores, and that writes off the underperforming homewares concept, Lifestore.
He is also widely tipped to announce a plan to return cash to shareholders as well as cut back on capital expenditure across the group.
But what about the other thorny issue in Rose’s side - Simply Food, and the wider food strategy?
The great paradox of Simply Food, the group’s 62-store convenience offer, is that while it has been a big hit with time-poor, cash-rich urban consumers as ID Magasin’s straw poll shows (see right), it has been generating flat sales and, worse, cannibalising sales at other stores.
M&S has also come under fire for rolling out the concept too quickly, paying over the odds on leases and overestimating the potential returns. Richard Hyman, chairman of Verdict Research, says: “It is pretty clear that it has been expanded on the basis of unproven performance.”
A former M&S insider adds: “They always had a bee in their bonnet about convenience, seeing it as progressive. But the whole sector is only worth £20bn compared to the £100bn generated by the rest of food.”
Rose has made no secret of the fact he prefers the traditional M&S store model and is understood to have been seriously considering axing the concept altogether. But observers now believe he will take the less drastic step of scaling it back instead, either by halting expansion or selling off underperforming stores.
Richard Ratner, head of equities at Seymour Pierce, predicts: “I think we’ll se a bit of trimming of Simply Food. The concept works. The issue is where it is cannibalising sales at other stores.”
Rose should focus on tightening the criteria for site selection to avoid any further cannibalisation, says Andy Thornton, MD, global convenience expert SRCG, adding: “The issue has been getting the right stock in stores - most are overtrading. Availability is a key issue.”
However, it would be foolish to kill Simply Food, agrees Thornton. “The whole strategy behind it is that M&S had the best convenience food but not the mainframe in which to buy it. Simply Food has helped regenerate enthusiasm for M&S among younger consumers.”
As for the wider food strategy, Rose faces a similar task to clothing: he needs to clarify the strategy and restore core values to the £3.5bn business. As one observer puts it: “They need to go back to quality and value, to what they used to do well: differentiating their offer and hunting out new trends. They need to be able to say: this is made with the best ingredients from the best producers and, by the way, it costs 10% more.”
In 48 hours, Rose will finally lay his cards on the table. Speculation persists that if he does decide to return money to the shareholders, he may opt for a sale and leaseback to do it. The estate was last valued in 1988, the peak of the 1980s property boom, at £2.2bn, suggesting a significant asset gap.
Meanwhile, Green, whose 400p-a-share offer was higher than many expected, has until August 6 to table a bid. Though the tussle for Marks and Spencer may have turned into a cat and mouse affair, Rose will be hoping that, like Jerry, he’ll be the one having the last laugh.
There are currently 62 Simply Food stores across the country, with the highest concentration by far in London as the map by CACI on the right shows.
The 19 railway station stores that are operated in franchise partnership with Select Service Parnership (part of Compass) are understood to be among the most succesful stores.
But doubts over Simply Food’s future could put an end to plans to extend the partnership to up to 40 railway locations by 2005.
There is also speculation that underperforming Simply Food stores in less urban areas may be axed.
Should it stay or should it go? Research and design company ID Magasin asked shoppers for their verdicts on Simply Food and the overall M&S food offer. The response was universal, almost...

Laila, 76, Oxted
I find M&S Simply Food a superb idea.Their food is very clean and of excellent all-round quality and the range is very handy for some people, especially those with little time on their hands or who live on their own. However I have always shopped in the food halls as I have a big family.

Gil, 51, Newtown
The Marks and Spencer in Chester is in two bits and one is all food, I don’t shop there often - I might buy the odd packet of biscuits if I am passing but M&S’s food is ludicrously expensive. I reel with horror at how much people spend on unnecessary items. I suppose some of the ready meals are OK.

Elena, 24, Catford, London
Simply Food has a good variety of tasty foods. The packaging is original, colourful and inviting. Bearing in mind the overall quality, I consider the products well-priced. The food halls cater for people shopping for a different reason. There, the emphasis is on choosing the ingredients. However, it is less convenient.

Alicia, 24, Oxford
M&S Simply Food ready meals tastebetter than most ready-made foods. The ingredients are of good quality and I believe there is relatively good value for money. Simply Food is more imaginative and it is easier to find new and exciting flavours and products. It makes life taste better.

Valerie, 68, Baldwins Gate,
I like Simply Food - partly because there
is one very near to my home. Also, I like the idea of being able to concentrate purely on food shopping without being distracted by other merchandise. The shops are smaller and don’t have as wide a selection, but there is plenty for my needs.

Emma, 32, Broxbourne, Herts
I used to shop in the Liverpool Street station store and it’s a shopping nightmare. The aisles are very small and cramped and however many tills are open there was always a huge queue. The food halls have more choice and more space. Stores such as Sainsbury’s Local and Tesco Metro do a better job at selling luxury food goods but in a better environment.
Simply Food
Vox pop