M&S to Speed Up Online Delivery After Decades of Underinvestment

Marks & Spencer Group Plc (MKS) said it plans faster delivery of online orders and will make products more available as it targets 1 billion pounds ($1.6 billion) of e-commerce sales and addresses two decades of underinvestment.

The largest U.K. clothing retailer will seek the capability to deliver goods on the day they are ordered, Laura Wade-Gery, executive director of multi-channel e-commerce, said today at an e-commerce distribution center in Castle Donington, England. M&S currently offers next-day delivery, putting it behind competitors such as Next Plc. (NXT)

The Castle Donington warehouse and upgrades to the supply chain will help the retailer to increase the availability of clothing 9 percent by 2015, Bolland said. The site, which opened earlier this year, is “the most-high tech environment in the world,” Chief Executive Officer Marc Bolland said, likening it to the set of the movie “The Matrix.”

M&S has trailed competitors in embracing Internet shopping. The retailer has about 6 percent of the U.K. market for clothing and footwear online, compared with about 11 percent overall.

To bridge the gap, M&S is investing 300 million pounds in information technology and the supply chain. The retailer is seeking to increase multi-channel sales to as much as 1 billion pounds by 2014 from 559 million pounds last year. E-commerce sales rose 23 percent in the fourth quarter, compared with 0.6 percent growth in total same-store sales.

M&S has “under-invested in this infrastructure for upwards of 20 years,” Chief Financial Officer Alan Stewart said today. The retailer’s supply chain has historically been “slow and expensive” with inventory in more than 50 locations, he said.

‘Bigger Benefits’

Castle Donington in central England, one of three distribution centers planned by M&S, will process about a million units a day. The retailer will also have a port site in southwestern England to ship products overseas.

M&S has introduced a forecasting system for its food business that has cut the number of sold-out items by 15 percent, information technology director Darrell Stein said today. Changes to the clothing system will have “bigger benefits” than in food, he said, without being more specific.

The retailer expects to boost annual profit by 45 million pounds a year by 2015 through changes to its purchasing methods, said Krishan Hundal, director of general merchandising sourcing.

M&S is moving toward shipping products to the U.K. and shifting them to warehouses itself, rather than relying on suppliers. The retailer still has to convert its “big suppliers” to that higher-margin model, Hundal said.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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