In 1998, however, there was a 23% drop in profits, and by 2001 Marks and Spencer was no longer even in the Financial Times list of the top 500 global companies. It was even in danger of being taken over by another company. What had gone wrong?
First of all there was increased competition from retailers such as Gap and Next which produced more fashionable clothes. Secondly, there was increased competition from supermarkets which were improving their food products and also diversifying into selling non-food products. For example, Asda started to sell a fashion range designed by George Davis, the founder of Next. Thirdly, the management of M&S were not good enough for this more competitive environment. They were old-fashioned, autocratic and out of touch with both their staff and their customers.