BECKHAM
12-05-2013, 12:31 PM
Next Tuesday evening is being billed as something of a make-or-break moment for Marc Bolland, the chief executive of Marks & Spencer. Inside One Marylebone, a Grade I listed neo-classical church in central London, designed by Sir John Soane and now reinvented as a venue for glamorous events, the retailer will unveil its much-anticipated autumn/winter clothing ranges with a champagne reception.
After seven consecutive quarters of falling sales in its general merchandise ranges – clothing and homewares – Bolland's continued tenure at M&S may depend on whether shoppers take to the ideas generated by his crack new clothing team, led by general M&S veteran John Dixon and former Jaeger boss Belinda Earl.
But, beyond the glamour of the catwalk, Bolland has other big problems. Even if the new coats, dresses and jumpers are hailed a success, he is facing a marathon to modernise Marks & Spencer's antiquated technology and delivery systems. Right now, old-fashioned equipment, some of which is 20 years behind the times, is contributing to M&S's clothing woes.
While other retailers have hi-tech systems to track stock, M&S still relies on staff to count it. While rival H&M boasts it can get designs from the drawing board to the store in a fortnight, M&S takes longer than that just to get its merchandise from the ports to its shops.
The scale of Bolland's challenge was made clear this week when he unveiled a new 900,000 sq ft warehouse in Castle Donington in the East Midlands.
Alan Stewart, M&S's finance director, outlined the scale of the challenge: "The business we have got has under-invested in infrastructure for upwards of 20 years." The way the company buys and distributes its clothing, he said, was "no longer appropriate".
Shoppers may be looking for the latest looks and demanding new ideas in stores and online every few weeks, but M&S takes two-to-three weeks just to transport goods from UK ports to its stores.
Meanwhile, stock is held in more than 50 warehouses around the UK, meaning it can take several days to assemble an order for someone shopping online. With online shoppers now expecting next-day or even same-day delivery of their orders, M&S's old-school equipment and systems are hindering its progress online, one of the few areas of the clothing market which has continued to grow throughout the economic downturn.
The Castle Donington warehouse will eventually process all on-line orders and distribute goods to stores around the country. Although it is currently handling just a few hundred items a week, it should be processing 1m orders a day next year.
Outdated computer systems mean M&S still doesn't have up-to-the-minute information on where its clothing stock is, on what's selling well and what's not in its stores. All that makes it harder to make the right decisions on how to distribute stock and where and when to offer discounts. It means customers often can't find what they want either online or in their local store - and M&S misses out on sales.
It is all of those problems - as well as the dowdy designs, that have contributed to the seven quarterly declines in underlying sales of clothing.
The hope is that a £1bn modernisation programme, which began in 2009, will help turn things around. But the clothing part of that plan is only just beginning to kick in now.
Marks & Spencer argues that improving the IT and delivery systems in its food division over the last few years has already helped super-charge performance.
Sales of food, once the impact of new store openings is stripped out, rose 4% in the first three months of 2013, continuing an upward trend.
Darrell Stein, the retailer's IT boss, says that new forecasting and ordering systems have cut the number of lines selling out by 15% and that other software now helps allocate space most profitably. The fish counters, for instance, were run through the computer, and the amount of space wasted on the displays was cut by a quarter.
By contrast, he says, the level of availability in general merchandise is "not good enough" and that, partly as a result, M&S is having to discount too often. New IT systems will help fix those problems according to Stein who says: "We are confident we can achieve bigger benefits than in food."
To reach their full potential, these systems need accurate knowledge of stock, so stores are also beginning to use electronic clothing tags, allowing staff to use scanners to check the number of items on the shop floor rather than counting them by hand. The majority of clothing will use such tags by the end of this year.
It will be a major shift for Marks & Spencer. Some of the retailer's systems for over-seeing the movement of stock through its supply chain are more than two deacdes old.
The question for Bolland is whether shareholders will give him time to complete the modernisation programme. Of the three distribution centres M&S wants for clothing, only one is fully built: the Castle Donnington site, which will not get into top gear until next year.
A second site in Bradford has yet to be fully fitted out and won't be distributing clothing for at least three years, while the third site has yet to be secured. M&S has said it wants this site to be located at a port in the south east of England and it's widely expected to be at the London Gateway container port in Essex. But the retailer has yet to cut a suitable deal, let alone begin building work.
Meanwhile, introducing hi-tech warehouses can be fraught with problems. Sainsbury's was nearly brought to its knees by problems with a fully automated warehouse in 2004.
Simon Irwin, an analyst at Credit Suisse, says: "The programme looks like it has slipped back by a year already. There is clearly potential in operating the business better and getting the right product in at the right time but it's all a bit of a black box as to when we are going to see these benefits."
After seven consecutive quarters of falling sales in its general merchandise ranges – clothing and homewares – Bolland's continued tenure at M&S may depend on whether shoppers take to the ideas generated by his crack new clothing team, led by general M&S veteran John Dixon and former Jaeger boss Belinda Earl.
But, beyond the glamour of the catwalk, Bolland has other big problems. Even if the new coats, dresses and jumpers are hailed a success, he is facing a marathon to modernise Marks & Spencer's antiquated technology and delivery systems. Right now, old-fashioned equipment, some of which is 20 years behind the times, is contributing to M&S's clothing woes.
While other retailers have hi-tech systems to track stock, M&S still relies on staff to count it. While rival H&M boasts it can get designs from the drawing board to the store in a fortnight, M&S takes longer than that just to get its merchandise from the ports to its shops.
The scale of Bolland's challenge was made clear this week when he unveiled a new 900,000 sq ft warehouse in Castle Donington in the East Midlands.
Alan Stewart, M&S's finance director, outlined the scale of the challenge: "The business we have got has under-invested in infrastructure for upwards of 20 years." The way the company buys and distributes its clothing, he said, was "no longer appropriate".
Shoppers may be looking for the latest looks and demanding new ideas in stores and online every few weeks, but M&S takes two-to-three weeks just to transport goods from UK ports to its stores.
Meanwhile, stock is held in more than 50 warehouses around the UK, meaning it can take several days to assemble an order for someone shopping online. With online shoppers now expecting next-day or even same-day delivery of their orders, M&S's old-school equipment and systems are hindering its progress online, one of the few areas of the clothing market which has continued to grow throughout the economic downturn.
The Castle Donington warehouse will eventually process all on-line orders and distribute goods to stores around the country. Although it is currently handling just a few hundred items a week, it should be processing 1m orders a day next year.
Outdated computer systems mean M&S still doesn't have up-to-the-minute information on where its clothing stock is, on what's selling well and what's not in its stores. All that makes it harder to make the right decisions on how to distribute stock and where and when to offer discounts. It means customers often can't find what they want either online or in their local store - and M&S misses out on sales.
It is all of those problems - as well as the dowdy designs, that have contributed to the seven quarterly declines in underlying sales of clothing.
The hope is that a £1bn modernisation programme, which began in 2009, will help turn things around. But the clothing part of that plan is only just beginning to kick in now.
Marks & Spencer argues that improving the IT and delivery systems in its food division over the last few years has already helped super-charge performance.
Sales of food, once the impact of new store openings is stripped out, rose 4% in the first three months of 2013, continuing an upward trend.
Darrell Stein, the retailer's IT boss, says that new forecasting and ordering systems have cut the number of lines selling out by 15% and that other software now helps allocate space most profitably. The fish counters, for instance, were run through the computer, and the amount of space wasted on the displays was cut by a quarter.
By contrast, he says, the level of availability in general merchandise is "not good enough" and that, partly as a result, M&S is having to discount too often. New IT systems will help fix those problems according to Stein who says: "We are confident we can achieve bigger benefits than in food."
To reach their full potential, these systems need accurate knowledge of stock, so stores are also beginning to use electronic clothing tags, allowing staff to use scanners to check the number of items on the shop floor rather than counting them by hand. The majority of clothing will use such tags by the end of this year.
It will be a major shift for Marks & Spencer. Some of the retailer's systems for over-seeing the movement of stock through its supply chain are more than two deacdes old.
The question for Bolland is whether shareholders will give him time to complete the modernisation programme. Of the three distribution centres M&S wants for clothing, only one is fully built: the Castle Donnington site, which will not get into top gear until next year.
A second site in Bradford has yet to be fully fitted out and won't be distributing clothing for at least three years, while the third site has yet to be secured. M&S has said it wants this site to be located at a port in the south east of England and it's widely expected to be at the London Gateway container port in Essex. But the retailer has yet to cut a suitable deal, let alone begin building work.
Meanwhile, introducing hi-tech warehouses can be fraught with problems. Sainsbury's was nearly brought to its knees by problems with a fully automated warehouse in 2004.
Simon Irwin, an analyst at Credit Suisse, says: "The programme looks like it has slipped back by a year already. There is clearly potential in operating the business better and getting the right product in at the right time but it's all a bit of a black box as to when we are going to see these benefits."