M&S Faces Headache At New Distribution Site
Marks & Spencer (M&S) is facing a fresh headache in its efforts to revive its core UK general merchandise business amid a slew of technical problems at a vital new distribution centre.
Sky News understands that the company has been hit by a range of IT glitches at a new 900,000 square foot warehouse at Castle Donington in Leicestershire that will ultimately be used to fulfil all of its customers' online orders.
The problems were of a sufficient scale to prompt some M&S trading directors, who are responsible for specific product categories, to express concerns about allowing their stock to flow through the new centre for fear of disrupting availability in stores, according to insiders.
M&S was working to address the IT issues, which had also given rise to compliance concerns about product integrity, they said.
An M&S spokesman said they did not comment on "rumour and speculation", adding: "We've said from day one that operations at Castle Donington will build over a long period of time to protect customer service. Nothing has changed and it is early days on-site as we follow the ramp-up plan."
There is no suggestion that M&S will be unable to resolve the IT issues in time for the peak Christmas trading period although if that did turn out to be the case, the company would implement contingency plans to ensure the fulfilment of customer orders, an insider said.
The efficiency of the Castle Donington site is an important test of M&S chief executive Marc Bolland's plans to improve the performance of the company's clothing business after eight consecutive quarters of declining like-for-like sales.
When it was opened in May, the new centre was hailed by Mr Bolland as a key milestone in the company's efforts to modernise its supply chain.
"Castle Donington is one of the most modern, fully automated distribution centres in the UK," he said at the time.
"As we are recruiting a significant proportion of employees through our Marks & Start Logistics scheme for people with disabilities, this investment in the UK is a unique combination of state-of-the-art technology and a great social working environment."
The building, which includes Europe's largest solar panel, is designed to handle one million orders every day, and at the same time to underline M&S's credentials as a socially responsible employer.
M&S boasted at the time of its opening that the site was large enough to contain 11 football pitches the size of Wembley or a dozen Boeing 747 aircraft.
Mr Bolland's blueprint for modernising M&S's supply chain has been welcomed in principle by the City, which is keen to see the retailer delivering as much as £300m in annual savings generated by slashing the number of distribution centres it uses.
Dirk Lembregts, M&S's director of supply chain, said in May that the overhaul would mean a 70% reduction in the period between customer orders being placed and the delivery of products.
M&S has lagged behind many rivals in its e-commerce operations, terminating a partnership with Amazon and recruiting one of the architects of Tesco's online success to help develop a new website.
News of the IT issues comes on the day that the retailer unveiled an autumn advertising campaign shot by the prominent photographer Annie Leibowitz.
It stars well-known figures from the arts, sport and showbusiness, including the actress Dame Helen Mirren, artist Tracey Emin, author Monica Ali, Olympic champion boxer Nicola Adams and creative director of US Vogue Grace Coddington.