The chickens are coming home to roost. And I'm not talking about the vengeance that is being meted out on Sainsbury's et al by Jamie Oliver and his ingrates, as grocers get it in the neck for their poultry welfare. I'm talking about Marks & Spencer. When Sir Stuart Rose came in he rightly dropped the price of many clothing lines, as its pricing policies had grown totally out of sync with deflationary trends led by Primark, Asda and Sir Philip Green's Arcadia group. His recovery programme was built on much more than just a redressing of the value proposition in fashion - the economy helped too, just as it's clearly hindering now. But I can't help thinking the further price cuts announced in the autumn on a number of lines have been counterproductive. Cutting prices can protect a retailer's sales in a market such as this, but it can also erode a company's sales - and margins - unnecessarily. There is a case for suggesting that improvements to the range introduced by Rose won back a lot of customers who would have bought anyway but did so at a lower price. Rose is a far better judge of the economy than I, but as we've noted before, there is a growing disconnect between the food and fashion offers. It extends to branding, too. The M&S position appears more Kerry Katona than Myleene Klass, which may work for Iceland but sure doesn't feel right for Marks. M&S is not the only big retailer to chase the discounters. Tesco, it emerged this week, has set up a model of a deep discounter at its HQ to try to learn from the success of Aldi, Lidl and Netto. Aldi's sales (up to £566m) are for the first time bigger than all the independents put together. But as our trip this week, to Netto confirms (see p34), discounters are achieving success partly because they are going upmarket.

Topics