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A potential £300 million profit has been generated. A month without online orders. Shelf gap. Stolen customer data and now the sudden changes could continue into July. This is an M&S cybermeltdown.
The lasting fallout from a cyberattack on one of the UK’s most beloved retail brands has overshadowed an exemplary series of results this week. The numbers showed the city what all middle-class female shoppers already knew. M&S has finally reverted Mojo in both food and fashion. But for now, if you want an Olivia von Halle Cat Printed Pajama Set, you’ll need to go to the store and fight it.
After seeing around £750 million, investors wiped out M&S stock prices after being forced to suspend online orders, and were soothed by a 20% dividend increase. But as FTSE 100 retailers struggle to get their IT systems back on and off, the bigger question is how generous their customers will be.
After spending hours chatting with shoppers in stores and social media, the surprising conclusion I have arrived at is truly extremely generous.
Yes, customers are unable to order online and are unhappy with the low availability of certain products. However, the most commonly expressed sentiment was that they were proud to support their beloved M&S, attacked by evil criminals.
“If there’s a good time for M&S to be in crisis, it’s going to happen now,” says veteran retail analyst Richard Heiman.
For many years, M&S struggled with its product range, but its ability to utilize this affection was weak. Paying 40p for a paper union jack bag today could be wrinkled on our noses, but recent fashion collaborations, booming beauty business, a revamped food hall and partnership with Okado have attracted shoppers (did you mention chocolate-coated custard cream?)
M&S did not reveal sales data this week after the circular attack. Despite all this sympathy, it should be ugly. Two bank holiday weekends, two paychecks, and a heatwave-straddled suspension stolen fashion rivals with fully functional websites like John Lewis, Next and Borden. Will shoppers flock when online orders finally return?
M&S knows how to get into a crisis. They also know how to manage a crisis. After the chaos shortly after the attack, customers have been informed via email and social media by frequently updated and apologizing for what is important. It was opened about theft of customer data and issued warnings about attempted fraud. The shoppers are angry, but the details of the bank were not included.
Cooperatives and Harrods are also being attacked, and the fact that third-party suppliers are being criticized rather than weakness in M&S’s own system is useful for optics. Management may argue that it is a “road conflict,” but this is a troublesome wake-up call for all consumer businesses.
With web orders still suspended, the store feels much busier than usual. M&S responded wisely by increasing the number of hosts stationed at Tyres and the store entrance by 75%. It claims that shoppers have a “zero wait time” that calls a customer service hotline (I rang to test this and quickly got on human). Staffing is expensive, but experts believe that investment will pay off.
“Many organizations that aren’t as customer-focused as M&S have survived the £300 million hit of profit,” says Jo Causon, CEO of the Customer Service Institute. Incredibly, M&S was at the top of YouGov’s latest customer trust rankings, voted shoppers after the hack.
The true scope of financial damage depends on future fines, insurance payments, and the speed at which the system returns online. Analysts agree that M&S should not risk customer anger by rushing things.
For all the cool handling of the crisis, the dent in M&S stock means CEO Stuart Machine faces a £1 million hit on his pay package. However, if someone deserves a bonus, it’s the frontline staff. They did more than just keeping the store open. They protected the brand and greeted the disgruntled customers with stoicism and smiles. These human interactions are extremely important and should not be rewarded.
Given the loyalty of shoppers, it’s ironic that Sparks, M&S’s customer loyalty program, is truly pants. For weeks after the hack, there were no offers on the app, but before they disappeared, they were rarely appealing. Once the online business finally reopens, a decent promotional event will look very good for M&S, rewarding the patience of its loyal 18mn spark members.
claer.barrett@ft.com
Claer Barrett is the consumer editor of FT and the author of FT’s Surt Your Financial Life Out Newsletter series. claer.barrett@ft.com; Instagram and Tiktok @claerb
