M&S historically used to only stock their own brands of stuff — while they've given in somewhat over the years, it's still the case for the vast majority of what they have on the shelves.

Normally this kind of model is used to drive prices down, but it can also be used to dictate quality control — a "new and improved" only happens when M&S wants it to, not when a brand's owners need to square up their margins because costs have gone up but the supermarket refuses to accept a price increase.

M&S have always been at the top end of the market, which gives them a bit more breathing room — obviously % margins on bigger numbers are bigger margins.

Also, the ingredient cost difference between premium and el-cheapo often ends up being relatively marginal compared to the overall cost of the goods — it's often relatively negligible compared to production costs, transport, etc.

Cider is what I know, so to give you an example: in what feels like another life ago now, we used to supply most of the supermarket own-labels — to the point where it was easier to list the ones we didn't do than the ones we did.

On an industrial scale, the difference between minimum-legal-juice-content, artificially-sweetened, chemical-tasting piss and something actually fit to drink ended up being about 0.5 pence per case of six 2L bottles.

We genuinely tried quite hard to persuade the supermarkets to let us improve the recipe — own-label or not, it’s not like we were proud to be making the stuff (only reason we did was because it covered the overheads). The supermarkets said they'd rather keep the halfpence.

While sure, "not always," M&S for the most part don't do the el-cheapo versions of stuff — which means they're both better insulated from price shocks and don't have to artificially create product segmentation between cheap / normal / best that you typically see at Tesco etc.

What tends to happen elsewhere is:

• The cheapo version gets dumbed down as much as possible to cling to the original price point.
• The normal one gets dumbed down a bit, but also shoots up in price, closing the gap to the fancy one.
• The premium one then has to go up again to maintain the value differential.

If you’re doing all three, you end up having to constantly move prices up the ladder.
Whereas M&S mostly just do "nice" and "super fancy," which simplifies things massively.

Another thing that's probably worth noting is that unlike other supermarkets, M&S are still pretty diversified — roughly 50/50 between clothes and food if you lump international stuff in too.

People go into M&S expecting it to be more expensive — but also expecting it to be nice. You're already primed to be shopping on value, not just price.

As such, they don't need to worry too much about being cheap — instead, they've got to leave you with the impression of "huh, that's better than I was expecting — d'ya know it's almost as expensive in Asda as it is shopping here these days!"

Oh — and finally, one last thing that sets M&S apart: no private equity.
Which seems to be the kiss of death for just about any business these days.

It came close after Covid — if it had gone through, I doubt you'd be posting this today.
(2021: US private equity giant considered M&S buyout)

They’ve got some other financial investments too — they bought out a logistics company (Gist) which probably helps when negotiating own-label contracts if they can ask for ex-works prices (although I’ve no idea if that’s what they actually do).

Also, they’ve got a 50% stake in Ocado (which is admittedly losing money, but improving), and their own stuff now makes up nearly 1/3rd of baskets — which essentially gives them two bites of the cherry on their own-label goods.

Although sure, it'd be nice if Ocado became profitable — but honestly, from M&S's perspective, I'd imagine the real value of the Ocado deal is getting a peek at their competitors' sales data through the platform.

Disclaimer: cider anecdote (which actually did happen) aside, I'm entirely just some idiot wasting friday evening by speculatively talking out of my arse on the internet. 🙃