The closure of the Marks & Spencer chain in Israel is perhaps proof that it isn’t enough to adopt the style of a successful international company - the style must first be adapted to the local consumer public.
The method of swallowing up a giant brand name like Marks & Spencer among Hamashbir Lazarchan’s brands had no chance of succeeding from the outset. Gradually, they began to understand this even at Hamashbir, and started to create separate departments for Marks & Spencer products. At a certain stage, Marks & Spencer International’s management woke up too, and reached the conclusion that there was no need to do things differently from the way they are done in the rest of the world. A new format began to be organised, under heavy pressure from the British company to separate Hamashbir Lazarchan and Marks & Spencer stores. The operation of the chain was taken out of Hamashbir Lazarchan’s hands, and transferred to Blue Square.
Seven Marks & Spencer branches operate at present, six of them independently, and one as a store within the Hamashbir Lazarchan Dizengoff Centre store. The eighth store was meant to open at the Shalom Centre in Tel Aviv. The other branches are at the Ayalon Mall, the Lev Hamifratz Mall in Haifa, the Rehovot Mall, the Arim Mall in Kfar Sava, the Jerusalem Mall in Malha, and in Ashdod.
From a business point of view, apart from a short period, the company did not enjoy financial success, and it has been losing money for three years. Marks & Spencer’s overall sales turnover is estimated at NIS 70 million a year. The losses - NIS 2-3 million a year - are hidden away in Blue Square’s non-food figures.
Why did the international chain, considered to be a phenomenon in world retailing, with annual sales of over $10 billion, fail here?
In the industry, they are saying that it didn’t succeed because of severe errors in positioning, in selecting the target public, and in planning: going for an older and conservative market segment; stores that were too small, preventing the true power of the brand from being brought out; and lack of vision in design.
Another reason for the lack of success: the local Marks & Spencer’s biggest competitor was, they say, the Marble Arch branch in London. Prices there are lower than those the company set in Israel. The high prices in Israel were due to the transfer prices from the British company, and they hurt sales to Israelis. Add to that the difference in Israeli tastes, and the fact that company’s full range of products was never displayed, and you have a recipe for failure.