Marks & Spencer continues to face problems at distribution centre

Marks & Spencer is still struggling with problems at its hi-tech distribution centre in Castle Donington, even after the trading peaks of Black Friday and Christmas.

Well-placed sources said that the 900,000 sq ft warehouse, which opened 18 months ago, could be processing a third fewer items than it had expected to be handling by this time. The shortfall is a result of communications problems between the various systems that handle products within the Castle Doningtoncomplex, compounded by record sales online.

M&S had to implement contingency plans, storing dozens of container-loads of goods at a separate warehouse over the peak season. It was also forced to set aside plans to distribute goods destined for stores from the facility to ensure the delivery of online orders, according to the sources.

The retailer said it was able to meet all its promised delivery services and was handling all its online orders at Castle Donington. It insisted that its contingency plans for peak periods always included additional warehouse space. A spokesperson said: “Our next-day delivery service is currently available and has been since before Christmas. Following our first full peak period at Castle Donington, we continue to optimise the facility.”

M&S was deluged with complaints from shoppers before Christmas after it was forced to delay deliveries of online orders by up to two weeks and withdraw next-day delivery services to stores as Castle Donington struggled to cope with the volume of orders placed over the Black Friday promotional weekend.

This week, a small number of shoppers continued to express disappointment on social media, with several saying orders had been belatedly cancelled because stocks were found to be unavailable days after their orders were confirmed.

Analysts are expecting the problems at M&S’s warehouse to hit performance at the retailer. It unveils its Christmas trading statement today and is struggling to turn around years of falling clothing sales.

Jamie Merriman, an analyst at Bernstein Research, wrote in a note this week: “Management had expected to return to sales growth in Q3 after a substantial investment phase, but we expect that this return to growth will now be further delayed.”

The company has previously denied that there were problems at its distribution centre, but online sales slumped 6% in the six months to the end of September. Nearly 5 million customers had registered on the new site by the start of November – 1 million fewer than on the previous one. Many shoppers have reported that the new site is difficult to navigate.

M&S’s new delivery centre is part of a £1bn programme to update the retailer’s old-fashioned IT and distribution systems to ensure it has the right items in stores and is able to handle increasing demand for home deliveries.

M&S had initially hoped to cut costs by axing more than 50 warehouses and instead using three vast distribution centres. But it pulled out of building one of the new facilities last year and now expects to have six national distribution centres by 2016-17.


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