M&S store closures: "Cost cutting exercises are often about keeping shareholders happy."

08/11/2016  -  11.08

Dr Stuart Farquhar, Senior Lecturer in the Department of Finance, Accounting, Systems and Economics

The retail sector is competitive, but I think the bigger issue is the concern about making profits to keep shareholders happy. 

With retailers who do make a large profit, cost cutting exercises are often about keeping shareholders happy. The company has obviously taken a decision to cut back for a variety of reasons. Clearly over time, everything other than the food part of the business has been struggling. But it is a relative thing, as Marks & Spencer still make a significant amount of money.

Apart from their food which they are saying they are going to expand, their clothing and other aspects of the retail offer has been under pressure from a variety of sources. M&S face challenges from the lower market competitors who undercut them and the higher end ones that are seen as better brands and more high quality. But in the food market, they are seen as good quality so they can charge a premium price.