UK retailer Marks & Spencer has dropped plans to open a 900,000 sq ft distribution centre at the London Gateway Port, opting for an alternative plan instead.

The hub at the London Gateway Logistics Park was set to receive millions of M&S products direct from ships docking at the adjacent deep-sea container port in Essex. It was announced in May last year when the company detailed its supply chain vision, with an aim of creating a single tier network by 2016/17.

But chief executive Marc Bolland said M&S will now utilise the existing national distribution centres (NDC) at Castle Donington and Bradford, supported by four of the existing regional distribution centres (RDC), which will be converted into NDCs. 

"This will use our capital investment more efficiently, with a planned GBP130m (US$219.2m) reduction in investment whilst largely retaining associated benefits," Bolland explained.

Meanwhile, the company said it has made "good progress" with its supply chain vision over the past year. Ramp up of volume at its Castle Donington e-commerce and national distribution hub continues as planned, with around 90% of e-commerce orders now processed through this new facility.

It also commenced the fit-out of the Bradford NDC. The roll-out of Allocation and Replenishment, the first part in the retailer's GM4 programme, has also started in general merchandise.

M&S reported a 3.9% decline in annual pre-tax profit earlier this week - dragged down by a 1.4% fall in like-for-like merchandise sales, the majority of which is clothing.