Continuing our profile of clients past and present, we revisit Marks & Spencer’s International Franchise Group (IFG) which has driven the rapid growth in the company’s international business over the last few years.
Marks & Spencer (M&S) is one of Berkeley’s longest-standing clients, with whom we have worked almost continuously for the last 16 years. Over that time, M&S has significantly increased its global footprint. In their last financial year alone, M&S opened 22 stores, including two in Moscow, an additional four in the Czech Republic and three more in India. It has wholly-owned stores in Hong Kong and the Republic of Ireland as well as almost 200 franchise stores in 30 territories.
Picking up the pace of international expansion
Building a strong franchise base has proved integral to M&S’s global growth strategy. The company has been able to enter new markets quickly – linking up with established organisations that have the infrastructure in place and understand the market – while reducing set-up costs.
With an earlier focus on growing existing territories, the pace of new market expansion picked up significantly over two years ago. It was at this stage that The Berkeley Partnership was asked to help. Simeon Piasecki, Head of International Retail within IFG, starts the story: “As it was some time since our team had any first-hand experience of developing franchises, we wanted to establish an ordered, efficient way of working while avoiding the potential pitfalls. We asked Berkeley to help us create the process, from identifying new markets through to opening a new franchise store. We wanted a more consistent approach that would enable us to take control and help our franchises perform to approved standards.”
"We wanted to establish an ordered, efficient way of working while avoiding the potential pitfalls."
Growing without the growing pains
With Berkeley’s help, the team developed a pragmatic process to enable IFG to develop a new business process for identifying, evaluating and selecting new markets, finding franchise partners, and then rolling out new territories and opening new franchises. The process would also enable existing franchise partners to expand into new territories.
The process begins with a market review and an assessment of commercial attractiveness. Tools are in place in order to better assess propositions and identify the risks involved.
Each stage in the process has clear go/no go criteria, which means people can concentrate on exploring and identifying strong opportunities rather than those with limited potential. Additionally, it enables IFG to quickly use the analysis to go back to potential partners and confirm levels of interest.
Simeon adds: “The selection tool gives IFG more control over partners who are trying to raise new business in markets that are perhaps not quite ready or not attractive enough. This can be done quickly without the need for lots of research.”
In addition, the output of the tool allows M&S to prioritise market opportunities.
If a market looks attractive, the next step is a far more detailed ‘PESTLE’ analysis, considering political, economic, social, technological, legal and environmental elements. The PESTLE analysis is followed by a territory visit to gain an in-depth overview of the potential market.
Selection is based around a ‘request for proposal’ process, providing IFG with a formal method to evaluate responses from selected candidates before arranging meetings to establish if it is appropriate to proceed.
Finally, there is the implementation stage. This includes contractual agreements, store location, project planning, management, HR, IT resources, supply chain and logistics. Once the operation has been up and running for 12 months, there is a ‘review and refresh’ stage, where IFG reviews progress and looks at what has been learned.
From Russia with love
Simeon sums up: “We now have a process to follow that saves management time and money and we are getting it right at the end of the day.
“IFG recently used the process to set up the Moscow franchise store. The process worked exactly as predicted and the opening went without a problem – in the first week, the store was bringing in numbers well beyond their estimates.”
As is often the case, creating efficient, well-established tools and processes releases management time to focus on the important relationship-building activities between M&S, its potential partners and the many other organisations required to enter new markets successfully.