Technology transformation reaps rewards at M&S

M&S will focus on improving logistics and product availability online

A major technology overhaul at Marks & Spencer is already reaping benefits in efforts to improve operations and customer interaction, according to the firm's latest annual results.

Over the past year, the retailer has made significant changes to its IT set-up as part of a transformation plan, which is already in its third year. Logistics is one of the latest areas that has been emphasised, with system enhancements taking place to radically improve supply chain efficiency, for example the streamlining of international distribution platforms.

“These changes benefited costs this year, but will have a more significant impact in 2009-10 and beyond,” the firm said in its full-year results today.

“We are investing in systems and infrastructure so that goods produced overseas can now be transported directly to all our markets without the need to first come through the UK. This will dramatically reduce export costs and speed up distribution,” it said.

UK sales at M&S fell by 5.9 per cent for the year to 28 March. Pre-tax profit decreased to £604.4m from £1.1bn last year. Overall sales rose by 0.4 per cent to £9.1bn.

The retail giant remains cautious about the economic outlook and expects further reductions in profitability for the current financial year, and has sought to introduce a project, dubbed "Doing the Right Thing" to accelerate international expansion and improve online operations.

Yearly web sales rose by 34 per cent and traffic saw an increase of 36 per cent. The firm credits the positive performance to the investment it has made in the internet channel so far.

Upcoming projects for online operational enhancements include initiatives such as international delivery, wine club and gift card redemption and extending its brand reach into white goods and its electricity arm M&S Energy.

M&S said it is aware of risks related to meeting customer expectations when they buy online, so it is looking to improve product availability and order fulfilment. Another example of a strategy in this area is the creation of a multi-channel proposition, which includes in-store product collection.

At the back-end, relevant IT projects carried out over the past year include the implementation of new tills and point-of-sale software. Such changes are hoped to speed up customer transactions and free up store staff from administrative duties to spend more time on the shop floor.

The retailer said it is also enhancing its trading and administrative systems. Earlier this year, M&S announced the roll-out of SAP retail applications to improve business data to gain more visibility of stock and provide better service.

Despite pressures prompted by the recession, M&S has managed to balance its IT budget through a self-funding approach, introduced to support its transformation process.