Last month, M&S announced a joint venture (JV) with one of Britain’s leading tech accelerators, Founders Factory. The new initiative will be called Founders Factory Retail, and comes shortly after claims by M&S’s chairman Archie Norman that the company operates on a “burning platform”.
By this, he is referring to M&S’s primary business model, that of a high street retail chain. In their recent annual report the company announced a sharp drop in profits. Shortly after that, the company announced it was closing more than 100 outlets over the next four years, amounting to one in three of its physical stores.
Clearly, M&S is going through something of a crisis. According to ITV, 17% of the company’s sales currently come from online sources. Compare this with the frequently touted e-commerce success of John Lewis, where 39% of sales are online. One of Archie Norman’s first actions as Chairmen was to declare the company’s “online operation was unfit for the digital age”.
Under his direction, M&S will make a “dash” for e-commerce. Their partnership with Founders Factory will form an important part of this strategy. Founders Factory Retail will presumably act like a bridge between this old high street chain and the new technology emerging from Britain’s flourishing tech startup sector. Through the joint venture, M&S will invest in new potential partners, who in all likelihood will be better placed to initiate and drive tech innovations.
Interestingly, in January of this year Founders Factory raised £5.6m in an unannounced equity fundraising. Those currently listed on their shareholder register include accelerator partners such as The Guardian, AVIVA, easyJet and Chinese PE firm CSC. One could guess with a fair amount of confidence that M&S was behind the recent £5.6m, as the two enterprises gear up to create Founders Factory Retail. We have enquired with their press team whether this was the case, and will update this blog as and when we find out.
We’re excited to see how this particular corporate-accelerator partnership pans out, and what sort of innovations it might produce.