LONDON -- Investment guru Phil Fisher used to recommend the "scuttlebutt" approach when researching companies to invest in. Basically, this meant seeking out and asking customers or clients about their view of a company. I tried this approach recently with high-street giant Marks & Spencer (LSE:MKS).
The view on M&S food was unanimous: It makes the best food in Britain. The quality and attention to detail that Marks & Spencer brings to the (dining) table is second to none.
The view on M&S men's formal clothing was also positive. I personally am a real fan of Marks & Spencer suits and formal wear. Again, the quality and attention to detail -- basically, the sheer hard work that goes into these clothes -- shine through.
A less flattering view
But when we turn to men's casual wear, and especially women's clothing, the view was far less flattering. If I try to buy clothes for my wife from M&S, she runs a mile. Now, she is no fashionista, but she likes fashionable, attractive clothing. Her view is that, for women's clothing, M&S needs to appeal to a broader demographic. At the moment, it seems to be missing out completely on the youth sector.
I think that Marks & Spencer has much to learn from its hugely successful rival Next (LSE:NXT). Next has a consistent standard throughout its product range: You have an unbeatable combination of quality and breadth in its products.
Can it beat Next?
I buy almost all my furniture and homeware from Next, as the blend of good design and variety of styling is second to none. Next has the best online presence of any of the high-street retailers, with a seamless and effortless experience whether you are buying from your computer or tablet, via the Next Directory, or from a shop.
A good online presence is increasingly important, as more and more sales are made over the Internet. At the moment, Marks & Spencer is losing out to companies like Next, ASOS and SuperGroup.
Thus my conclusion is that M&S is a decent investment but, for the share price to push on out, the company needs to work on its weak points. If it applied the same hard work and creativity to its furniture, online presence, and women's clothing as it does to its food offer, it would be unstoppable.
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