The choice of Marc Bolland of grocer Wm Morrison to be the next chief executive of Marks & Spencer has been treated in the media and by the stock market as a second coming. Since executive chairman Sir Stuart Rose unveiled his successor as chief executive last month, the reaction has been wholly positive and the group’s shares have soared towards 400p, almost double the low point at the worst of the great panic a year ago.
Why the enthusiasm? There is a clear sense of relief that the long search for Rose’s successor is over. Even Rose himself looks to be relieved, unburdening himself on Radio 4’s Desert Island Discs and turning up at social events from Morgan Stanley’s Thanksgiving Lunch to Sir Victor Blank’s farewell party at Lloyds Banking Group with a smile on his face and starting to think about his next assignment.
Rose’s greatest achievement at M&S, since he was hired in May 2004 to save the group from the attentions of his fellow retail knight Sir Philip Green, was to re-establish public and shareholder faith in the nation’s most emblematic retail brand. In 2007-08 he brought M&S within a whisker of returning to £1bn profit a year, before the recession knocked trade for six.
Faith in his leadership was temporarily rocked in the City in 2008, when, after boardroom disruption, Lord Burns stepped down as chairman and Rose, in breach of codes of corporate governance, stepped up to become executive chairman. Rose volunteered a public denial that he wanted to be “king of M&S”.
Plans for an internal successor to Rose, who could remain in place as a chairman until July 2011, were never seriously realistic. None of the candidates, despite good qualities, were seen as having the necessary high-level and board experience. Among Bolland’s tasks will be to try and keep this group, which includes fashion guru Kate Bostock, the food genius John Dixon and chief operating officer Ian Dyson, together.
Dutchman Bolland’s British reputation has been built around the transformation of Wm Morrison. When Bolland was brought in to succeed Sir Ken Morrison, scion of the founding family, it was chaotic. The purchase of Safeway, which brought Morrison south for the first time, changed the nature of the business. It became clear that the old Morrison’s staples of large jars of picked onions and tripe were not what the south wanted.
Bolland focused on two concepts; the street-market-within-a-superstore idea with its emphasis on fresh, UK-produced goods, and taking it up-market. The emphasis was to challenge Waitrose and M&S on quality. Among those impressed by this transformation was Sir Richard Greenbury, the former chair and chief executive, and creator of modern M&S, who regards what Bolland has done at Wm Morrison as the most impressive change in recent UK retail history.
But what attracted Rose and Sir David Michels, deputy chairman and head of the search committee, to Bolland? Ambition for the group. Bolland understands the importance of branding. He had previously missed taking the top job at Dutch brewer Heineken but gained enormous global knowledge.
Rose believes that internationally, it has been a lost decade for M&S. When Greenbury left at the turn of the millennium, M&S had established itself globally across Europe and was making plans for expansion into Asia. The first thing his successors did was close the international stores, sell off North American interests and place global expansion on hold. It was a disastrous error. While other British retailers were taking the British shopping experience overseas and becoming part of the globalisation revolution, M&S was in a “little Britain” phase.
Much of the effort was about boosting short-term shareholder value rather than taking M&S forward as a fashion brand. The miracle, in no small part down to Rose, is that it still has the largest market share of British fashion. So aside from the missing fashion credentials, Bolland looks the part for the job. His biggest challenge is the M&S culture itself. M&S holds a special place in British life. When all is well with M&S, the country feels better. So with the job comes a lot of customer, investor and media scrutiny. Rose, a natural media performer, has carried off this part of the job well. Bolland will have to carry the baton and direct the expansion into the new markets that M&S craves.