Marks & Spencer to increase the size of its food halls on a trial basis
M&S will instead cut back on the space dedicated to its clothing businessReuters

Marks & Spencer will increase the size of its food halls on a trial basis and cut back on the space dedicated to its clothing business. The move follows a drop in sales from its fashion vertical, while its food business continues to thrive in a tough market.

The British retailer is expected to reveal a drop in fashion sales over the key three months to 26 December. This would mark the third consecutive quarterly decline in this vertical. It has lost its core "mum and dad" clothing customers to rivals such Next, Debenhams, H&M, Zara and New Look and is struggling with this business amid growing competition.

While its online fashion sales is up by a third, its store sales in fashion is expected to be down by about 10%. City analysts expect overall fashion sales, including both M&S's online and offline sales, to have fallen by 2%.

Fraser Ramzan, a retail analyst at Nomura, said: "The channel shift [towards online sales] in the most recent quarter does raise questions about what to do with store space longer term. Other retailers such as B&Q and Debenhams have already addressed store space with concessions or closures. M&S does have a decent alternative use for some of their spare space — food."

On the other hand, its food business is performing well with sales at its established stores expected to have increased by about 1% during the three months to Boxing Day — placing it well ahead of grocers, including Tesco and Morrisons. Also, since the retailer's upmarket own-label food products cannot be bought elsewhere, its food business is well protected from the switch to online shopping.

While this new strategy to concentrate more on its food business at the expense of its fashion vertical will be implemented across eight stores over the next six months, M&S is considering if more of its stores could be rejigged to increase sales and profits, according to The Guardian.