M&S battles UK retail downturn with £450m IT spend
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Marks & Spencer earmarks £450 million in IT spending despite plummeting stock price
Beleaguered UK retailer Marks & Spencer plans to spend almost half a billion pounds on IT over the next three years, in a bid to push into international and online markets and ease its reliance on the ailing UK retail environment.
The plan, which was revealed in the company’s annual report published this week, will include replacing 40-year-old warehouse and distribution infrastructure with “a modern and streamlined logistics network with new overseas warehouses, as well as offshore stockholding and consolidation facilities.”
"We’re planning to take more control of our logistics from source to store, allowing us to monitor our stock more efficiently and improve margins,” the report said.
The retailer will also continue modernising its 16,000 IBM-supplied point-of-sale systems with new tills and handheld terminals.
The report also revealed the company’s motivation for this modernisation.
It’s online business, M&S Direct, is growing 70% a year and now accounts for £300 million in sales, while international sales (notably China) brought in £713 million, a 16% increase on last year.
But that success wasn’t mirrored by the rest of the company, which suffered a drop in stock market value of £1.7 billion after issuing a sudden profit warning ahead of its AGM.
The retailer’s food business, M&S Food, was particularly impacted, with customers abandoning the premium-quality (and premium-priced) stores in favour of more downmarket grocery brands and claiming the scalp of M&S Food boss Steven Esom in the process.
Amid its economic woes, M&S’s confident £450 million IT spend shows that the company views technology as a way out of trouble.
Further reading
Lessons from 7/7 The British Medical Association, the Metropolitan Police and Marks & Spencer describe how their IT systems coped when terrorists attacked London.
