In the money: Speed pressures shift M&S supply base
The UK's largest clothing retailer, Marks & Spencer is seeing its clothing supply base shift away from the Far East as it looks to increase speed to market after facing a series of replenishment issues earlier this year.
The company is increasing the amount of clothing it sources from India, Bangladesh and Sri Lanka to help mitigate higher wage and input costs in China and improve turnaround times.
Speaking to just-style yesterday (7 November), the company's financial director Alan Stewart said the shift was due to a "mixture of speed of delivery, cost of production and the ease of getting product out of certain countries".
However, he emphasised that M&S likes to work in "partnership" with suppliers and build relationships that last longer than one season.
"It's a constant dialogue, they face pressures, we face pressures, and we come to the right answer," he said.
The retailer has seen the volume of products sourced from the Far East, which includes China, decline to 44% of clothing over the first half of this year from 51% in the same period last year. South East Asia, which includes Bangladesh, Sri Lanka and India, has picked up the majority of the shift, rising to 44% of products from 37% a year ago.
Recently appointed general merchandise director John Dixon also told just-style he has spent the first month in the role speaking to customers to better understand their needs.
One of his projects will be to look at the supply base, with a "complete end-to-end review". He explained speed to market will be one of the key elements of that review - including looking at faster ways to get product into stores once they reach the UK.
In April, the company admitted that it had failed to buy deeply enough on its best selling lines, leading to sales declines in the fourth quarter of last year and the first quarter of this one. It said the issues were exacerbated by the long lead times associated with sourcing knitwear and outerwear from the Far East.
In response, chief executive Marc Bolland said the company has bought five times more of its advertised lines than last year. He added this has helped lift sales of these products threefold over the first four weeks of their launch, and meant it still had availability on these lines after four weeks.
Much of the discussion around the retailer's fortunes in recent quarters has been about speeding up the time products take to get to market and becoming more trend-led, yet Bolland was emphatic this does not mean that M&S is becoming a "fast fashion" retailer.
"What Zara does is fast fashion trying to copy what is happening on the catwalk at a quality level that is different than ours. What we have is completely different. We like to be on-trend, with a very good quality. It's a different position. Have we been backing the trends sufficiently in the past? Probably not," he said.
"Yes we are certainly looking at trends, but we are certainly not going to become a trendy business, let's not forget that we never forget the core customer. She wants to be seen in something that is not away from the trends, if you want something that has a certain style that's what we can do."
Yesterday, M&S saw its first half pre-tax profit fall 9.7% to GBP289.5m. Over the 26 weeks ended 29 September, group sales increased 0.9% to GBP4.7bn. General merchandise sales fell 5.1% over the half, hit by merchandising issues over the first quarter. Second quarter general merchandise sales were up 0.1%.
Bolland also set out his priorities for the new general merchandise team, which was completed on Monday with the appointment of Frances Russell as women's wear director, and Janie Schaffer as director of lingerie and beauty products.
He said the retailer will focus its clothing efforts on style, trends and best-in-class quality; good value; real choice - not proliferation; and on developing the instore and online shopping experience by better aligning buying with merchandising in-store.
It will take some time for industry watchers to see the results of these appointments, with their first collection in stores in July next year.
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