Marks & Spencer have this week announced a move into the energy market as part of a new deal with Scottish & Southern Energy.  Apparently, customers will now be able to buy gas and electricity in their shops and on their web site and earn rewards for signing up, renewing contracts and, perhaps more importantly, for cutting consumption.

M&S claim that their energy prices will be competitive, at around £1,196 per year for an average user, and the same as existing SSE customers who buy dual fuel by direct debit.

M&S Energy customers will get a £15 voucher if they reduce their annual energy usage by 10% and another £10 voucher if they opt for paperless billing.  Those who switch to M&S Energy ‘Dual-fuel’ also receive a £20 M&S voucher on sign-up and an extra £10 voucher for each year they remain with M&S Energy.  The deal will be launched on October 27th on the M&S web site and available through its network of stores by the end of November.

Some would say that the energy market is already complicated enough without major high street retailers jumping on the bandwagon.  There’s a plethora of suppliers to choose from and each has its own bewildering array of promotional offers, incentives and discounts to baffle new and existing customers with.  However, M&S have a world-class brand, a reputation for quality and a loyal and trusting customer base to leverage and I suppose selling energy is no worse an idea than Tesco selling car insurance or John Lewis selling holidays.

But where does this relentless drive for diversification end?  M&S cars?  M&S mobile phones? M&S stair lifts?  The retailer is already selling electrical goods and furniture and this new energy deal is part of an ongoing initiative to expand into a wider range of goods and services. 

Clearly, we are living through troubled times and high street retailers are under increasing pressure to innovate their way out of the current downturn in sales and the inevitable slump in profits.  M&S also face increasingly difficult trading conditions and they have fallen from grace with the City since those heady days of £7.50p per share valuations just last year.  Their current share price of £2 speaks volumes about investors’ opinions on their short to medium-term prospects! 

Utility companies tend to have much more of a charmed, ‘dull-but-steady’ existence, fairing well through the tougher trading periods but, conversely, fairly unexciting through the good times too. SSE, one of the ‘big six’ domestic energy suppliers with around 8.5 million customers, will want to use this new link with M&S to reach additional customers and grow its market share.  M&S will be happy to have the new revenue stream to hopefully prop up losses in some of its more ’sensitive’ product lines.

So, it may have all the makings of being a sensible deal for both parties but what about the poor consumer?  Will M&S customers be getting a great deal?  Will they be better of than buying direct from energy suppliers in the open market?  Only time will tell but I doubt it.

I don’t think a few vouchers could ever persuade me to stick with just one energy supplier purely because M&S choose to recommend them.  However much I like M&S as a purveyor of good food, boxer shorts and socks, I won’t be fooled into trusting them to supply my every need!  There are far too many deals and  incentives in the market that make it more lucrative to regularly switch my energy supplier to save money.  The vouchers simply don’t compensate for the potential savings lost.  However, if M&S ever get the confidence to guarantee the best prices in the marketplace and they promise to take the leg work out of constantly switching supplier for me… then I might just reconsider.

Article by Alan Potts