Marks and Spencer retreats from mainland China

When news of the closure Shanghai’s last Marks and Spencer store on Saturday reached Mary Zhou, she felt a pang of sadness, before rushing out to pile a trolley high with discounted trousers.

“It’s a great shame, I buy all my clothes here,” the 51-year-old school teacher said, as she hunted among the few clothes racks remaining at the company’s flagship store on Shanghai’s equivalent of Oxford Street. “I love their style. Not too modern, and not too out of date.”

But devotees like Ms Zhou have not been enough to sustain the British retailer’s 10 outlets in China. The brand faltered against competition from trendier fast fashion brands, while the combination of clothing and imported British food confused Chinese customers, and rising rent costs ate into margins.

Not even the 70 per cent closing down discounts could tempt accountant Li Mingzhen, 30, to step inside. “The quality is good, but the clothes aren’t that fashionable compared to H&M and Zara,” she said.

They had existing chains in Hong Kong and Malaysia, and they assumed the model would work for China

China closures are part of a retreat by the company from 10 countries as part of a strategic shake-up, but the loss of the world’s biggest consumer market has garnered the most attention. “Our decision to close our Chinese stores was driven by the fact that our stores continue to make losses and we have low brand awareness,” said Adam Colton, Managing Director of M&S Greater China.

Inside the Nanjing West Road store, some bargain hunters had their own theories about the store’s demise. “It wasn’t clear what kind of customer they were aiming for,” said Vincent Liu, who was scrutinising a grey cotton waistcoat. “It wasn’t top of the range for business workers, or stylish fast fashion which young people like”.

The company opened its first mainland China store here in Shanghai in 2008, before expanding into Beijing and lower-tier cities. The outlets focused on formal clothing and emphasised their Britishness, with Britpop piped into stores and cafés selling jacket potatoes, baked beans and afternoon tea and alongside shelves of biscuits and ready meals identical to their UK equivalents.

One former staffer at the company’s China office who asked not to be named said sluggish in-store sales growth tipped into declines mid-last year. “To put it simply, we hadn’t understood what Chinese consumers want,” she added.

Unlike in mainland China, Marks and Spencer has done well in the former British colony of Hong Kong.

It has expanded to 26 stores across the semi-autonomous Chinese city, with an increasing focus on its food offering. “They had existing chains in Hong Kong and Malaysia, and they assumed the model would work for China,” said Matthew Crabbe of consultancy Mintel, adding: “They didn’t really adapt to the needs of Chinese consumers.”

Along with other British retailers such as Sainsbury’s, Marks and Spencer will maintain a presence on Tmall, an ecommerce site owned by internet giant Alibaba. The move has growth potential due to strong demand for imported food in a country hit by regular safety scandals, Mr Crabbe said, adding its clothing offering would continue to struggle against the competition.

As the strains of British R&B singer Gabrielle’s 2001 hit ‘Out Of Reach’ filled the shop floor, Ms Zhou said she was unlikely to move to ecommerce. “Online, there’s no way to touch the fabric,” she said.

Additional reporting by Xia Keyu and Ben Bland