M&S boss Steve Rowe has clear plan to boost clothing and home sales

On the face of it, the latest full-year results from Marks & Spencer (Frankfurt: 534418 - news) confirm the impression of a business whose food products are outstanding, but whose clothing and home products have somewhat lost their way.

But Steve Rowe, the newish chief executive, has set out how he plans to remedy that.

At the heart of his plan is what he claims is a much better understanding of M&S's customers and their shopping habits than any of his predecessors enjoyed.

:: M&S counts cost of shake-up as profits plunge by 63%

It means Mr Rowe now divides his customers into one of three groups: 22 million 'occasional' customers, 7 million 'core' customers and three million 'top' customers, including a 'super group' that shop with M&S 208 times a year for food and 86 times a year for clothing.

He points out that, if every one of M&S's 32 million customers shopped at the stores just one more time a year, it would put an extra £500m in the retailer's tills.

Mr Rowe, who has spent almost his entire career at the store, attracted some raised eyebrows when, shortly after he took the top job, he described the core customer as 'Mrs M&S'.

On Wednesday, while reiterating that the top customers were women in their 50s, he highlighted some lesser-known facts about the group's customers.

He pointed out that 42% of them are men, which he said was "not a bad place to be when men buying menswear is one of the fastest-growing" areas in retail, while 22% of M&S customers are under the age of 35. They currently only account for around 10% of M&S's sales and so represent a big opportunity for the company.

And only 30% of customers buy both clothing and food, while 90% of store visits are 'single mission' - either for an item of clothing or an item of food - and so the group needs to work harder on getting shoppers to look at both categories.

Some will ask whether it is worth trying to get the 22 million 'occasional' shoppers and seven million 'core' customers to spend more when M&S remains so dependent on its hard core three million customers.

But Mr Rowe explained why it is: "We want to move them up the value chain. It's about life stage.

"People buy into the brand at different points in their lifetime. Many of us will remember being dragged to M&S to buy our school wear when we were a child and that's the first time you touch it.

"A third of female customers in the UK wear our bras and probably came for their first bra to Marks & Spencer. Many of the men will have bought their first work shirt from Marks & Spencer.

"That's how you get into the brand and as your family develops, your lifestyle develops, you see this acceleration through the brand."

The scale of the challenge facing Mr Rowe and his team is daunting.

As he pointed out, M&S has been helped in recent years by tailwinds that included faster profits growth in food and more efficiency in buying in clothing and home.

But these are now fading. While profit margins have been propped up in clothing and home, the company has lost £250m in sales in that category during the last three years, while international profits have halved.

At the same time, shoppers are shifting increasingly online, posing a challenge for the company on how many physical stores it needs to have and where those stores need to be.

Mr Rowe also admitted that "we cut back a little too far in areas like staffing" - which means more staff will be needed.

They're also going to be paid more, too, with M&S confirming today that shop workers are to receive a 15% increase in hourly pay, to £8.50, although 11,000 or so longer-serving employees will be less thrilled to learn that they are going to be moved from the existing final salary pension scheme to a less generous money purchase scheme.

The big question concerns clothing and home. Some 40% of all items are currently sold on a markdown and, as Mr Rowe insists, the company needs to "come off that promotional drug". So the number of 'clearance' periods each year will be cut from nine to four.

There was also something of a dig at his predecessor, Marc Bolland, who won plaudits at times for the fashionability of some lines but criticism about the ease at which shoppers could find the most sought-after items in stores:

"Fundamental in this business is to get right style, quality, finish, the look and feel, the touch of the fabric.

"Our target customer does not demand the latest catwalk fashion but quality, fit and contemporary style. Making fashion accessible as part of their wardrobe.

"Quality no longer means longevity of the product - customers look at fabric, fit and finish. We've traditionally been experts on fit and we can build on that.

"If we get the core product right, we know we can sell more."

Mr Rowe points out that women in particular are shopping less for clothes than they were, with 60% of women buying fewer clothes than they did 10 years ago, a change in habit that hits M&S, as market leader, hardest.

So, as well as fewer promotions, shoppers can expect the ranges to be simplified to focus more on essentials.

On food, the task is a little more straightforward. Convenience is the only area in food retailing that is currently growing, so there will be 250 more Simply Food stores around the country by the end of the year, with a further 200 by March 2019.

This will not, Mr Rowe stressed, be a race for space but rather filling in gaps where M&S is unrepresented in the food market.

In conclusion, Mr Rowe is clear about what he wants: fewer promotions, less complicated clothes ranges, more Simply Food stores and continued growth in online.

Delivering all of that in a deteriorating consumer environment, though, will be tough.