British retailer Marks & Spencer (M&S) is to begin an aggressive pricing and marketing campaign in Hong Kong in a move that could fuel further retail price slumps. The campaign, which will begin during Easter, will see a permanent price cut of between 10 per cent and 20 per cent on all products. The retailer will pour an estimated HK$10 million into marketing and advertising for its 10 stores in Hong Kong. The price cuts follow a series of massive discounts by other retailers to entice shoppers. John Cheston, the recently appointed managing director of Marks & Spencer's SAR operations, does not think the campaign will trigger a fresh round of price cuts among retailers. 'I want to move away from the buy-one get-one free, buy a pair of shoes get the second half price. I want our customers to trust us and come in again,' he said. 'And we're not kidding them.' Mr Cheston said the pricing of certain Marks & Spencer products such as jeans was not competitive enough. The retailer was simply passing on part of its improved profit margin as a result of efficient management of logistics and sourcing, he said. 'It's a win-win.' Marks & Spencer, one of Hong Kong's largest department store operators, sources 35 per cent of its products, such as men's and women's apparel and food, from low-cost regions such as Indonesia, China and Malaysia. The remaining 65 per cent are still sourced via Britain. The retailer will also introduce more contemporary fashion lines and open new stores. Mr Cheston said the rental contracts for five of the 10 stores would expire this year and some non-performing outlets might be relocated or shut. 'We will also look at new locations for stand-alone beauty or women's wear shops,' he said. 'If it works, we will expand this idea.' Marks & Spencer's Hong Kong operations performed well in the 26 weeks to September 29 last year, with operating profit jumping to GBP4 million (about HK$44.51 million) from GBP1 million year on year. 'This year will be a year of consolidation, with a lean and efficient team focusing on the Hong Kong market,' Mr Cheston said. He complained that there was a common misperception of Marks & Spencer shutting down its SAR operations. 'I don't know why many people think we're closing down, but we are not. 'We were thinking about selling the Hong Kong operations to a franchisee last year, but we decided to retain it in December mainly because Hong Kong's business will serve as our foothold to China.' However, a foray into the mainland would not take place for the next five or six years. 'It's not the right time. When travelling around China recently, I noticed that local department stores are very popular. Have you seen any foreign department store making money yet?' he said. Mr Cheston replaced former chief executive Jim McDonald, who will retire at the end of this month.
