St Michael's wings clipped

Martin Jacomb

THE RISE AND FALL OF MARKS AND SPENCER by Judi Bevan Profile, £16.99, pp. 269, ISBN 186197289X More than ten million people shop at Marks and Spencer every week. Many more feel they know M&S and can tell you what it is doing right and what wrong. Until a short time ago it was a symbol of British excellence, known world-wide. Not long ago, I even found an enterprising trader had set up a look-alike store in the Khyber Pass. But the firm tripped up in the final years of the last century. An icon which falls from grace often provides a fascinating story and M&S is no exception.

Michael Marks arrived in England in 1882 as a penniless immigrant, escaping anti-Semitic persecution in Russiancontrolled Poland. Marks was 20 years old, unable to speak English. By a stroke of luck he met Isaac Dewhirst, then a wholesaler, who lent him £5 to start a business as a pedlar. 'Don't ask the price — it's a penny,' read the sign, obviating the need for haggling in English. Twelve years later Marks formed a partnership with Tom Spencer, who was Dewhirst's cashier, He paid in £300 as capital and got 50 per cent of the business.

Judi Bevan's book tells of these beginnings quickly and clearly, and she paints a vivid picture of Michael's son, Simon, who from 1916 (when he was only 19) to 1964 drove the company to greatness. He first had to defeat Tom Spencer's son's underhand attempt to gain control Spencer then left the business and died of drink, the M&S partnership having lasted only 11 years. Simon's partner thereafter was his school friend Israel Sieff (whose sister he married).

What produced such phenomenal success? Simon's sure eye for choosing the styles, colours and fabrics which customers wanted, insisting on quality and low prices. He bought the right locations, and ensured the goods were always available. He was a total dictator, terrorising employees but inspiring them also. He died of a heart attack brought on by fury at the discovery of a defect in goods in ladies' tailoring.

The partnership with the Sieffs was one of unbroken success, ending with Marcus Sieff s monarchy — for it was a kingdom — which lasted from 1972 to 1984. All this, however, is but a prelude to the disaster of the late 1990s. It is when Judi Bevan reach es Richard Greenbury that you know why she has written this book. She is fascinated by his personality, by his successful years.

and the failure which followed. This part of the story is painful, certainly for me, because I was, as a non-executive director, in the thick of it. I was mightily sorry to find so many references against my name in the index.

Rick's early years were outstanding. When he became chairman in 1991 he turned a hesitation into renewed growth and led the climb to the magic billion pre-tax profits marker. Under him the firm did provide 'outstanding value'. And then things started to slip. There were no alarm bells at first. Quality started to slip a bit, service was not quite what it had been, and availability became an issue. The sales decline started in August 1998. It caused an immediate loss of confidence throughout the business; and when that happens everyone does their job less well, whether manager, selector or sales person.

Bevan points to the distraction of Rick by the Greenbury Committee's work, the failure of his marriage and the pain of a faulty hip joint. However, arrogance and complacency, inevitable after years of suc cess, had begun to infect lower levels of the company and Rick's subordinates did not rise to the challenge. Some would say that they were afraid to. that Rick was too fierce a dictator, and that all decisions were left to him. Maybe. The author blames Rick, of course, but others too. The executive directors come out as inadequate.

The non-executives also come out badly. I plead guilty. We are blamed for the way

the post-Greenbury succession was han dled, for allowing the candidates to get distracted by rivalries and internal warfare, and for deciding on the wrong man as chief executive, which we certainly did, although the choice was that of the entire board without a dissenting murmur. The fact is that succession after a big leader (and Rick was certainly that) is always difficult. The metaphor about acorns under a great oak most certainly applied.

This is the inside story. Some of it I did not know myself until I read the book.

Confidences clearly no longer last indefi nitely. That matters no longer. But at the time the leaking was a nightmare.

Internal confidential discussions frequently appeared in the papers the next day, making sensible decisions on succession nearly impossible.

The portrait of Rick that Judi Bevan paints is a harsh one. More benign was the oil done of him by Richard Foster, which we undertook to him would hang in the boardroom. The subsequent deliberate rejection of that undertaking was just a nasty footnote to an unpleasant story.

Was the M&S decline entirely selfinduced? I think there were external factors as well. The persistent strength of sterling in the 1990s turned the dependency on UK suppliers, with their unique M&S relationships, from being a huge advantage into a big negative. Competitors imported cheaper goods from low-labour-cost countries and were getting much smarter in other ways too. And by the 1990s the typical M&S woman had changed. She was spending her own money rather than her husband's, and was a little more concerned with fashion and less with durability. Moreover, secondary high-street locations had declined. The fact is that even the best business models sometimes grow obsolete.

The M&S icon may have fallen, and there are many would-be iconoclasts; but it is not smashed yet. There is some good stuff in the stores and the shares have done well lately. Whatever happens, this book will sell. It is, after all, outstanding value.