M&S set to ditch branded trial

Marks and Spencer's (M&S's) radical experiment to introduce branded lines to its food halls will be "quietly shelved", claim trade sources and analysts.

The company remains tight-lipped about the performance of the branded lines, which were launched in 19 stores in Teesside and Tyneside in mid-July.

However, analysts claimed the trial had proved to be a costly distraction rather than the road to salvation for M&S, which posted a 5.9% drop in like-for-like food sales in the second quarter of this year.

One leading supplier to the company said: "They are just going to let it fizzle out. It was pretty clear from early on that it hasn't been a huge success."

Referring to M&S's brand trial, another senior executive said: "I expect the brands to wither away."

One analyst added: "They have sold absolutely bugger all. It was a big mistake, even though they haven't said so in public yet. The fact that they haven't been shouting from the hilltops about this one is because there isn't anything to shout about."

The initiative served to highlight the strategic dilemma facing M&S food boss John Dixon, said Credit Suisse analyst Tony Shiret. "He has to balance short-term defensiveness with long-term positioning. M&S is about exclusivity, selling products you can't buy elsewhere. Going into brands or going downmarket, could damage the brand."

M&S was struggling to compete on prices, said Shiret. "You can see the logic of the pricing 're-alignment' on 530 lines, and the 'dine in for £10' initiative to increase footfall. But M&S has also taken 170 basis points off its gross margin in food, which is not good."

One manufacturing source said: "John Dixon has relooked at everything yet again after (former food directors Guy) Farrant and (Steven) Esom, which means that suppliers are still in limbo. But Project Genesis (M&S's crackdown on suppliers) is dead and screwing the supply base is not on the agenda. The recent promotions are funded by M&S."