Marks & Spencer ramps up cost-cutting with technology overhaul

Marks & Spencer is overhauling its back-office technology as the 134-year-old retailer ramps up efforts to strip out costs from the business while battling rapidly changing shopping habits.

The retailer has announced a new ‘technology transformation plan’ and struck an agreement with Indian IT giant Tata Consulting Service, which will become the retailer’s main technology partner. Under its plans 250 M&S employees will be transferred to Tata.

M&S said it would be consulting with a further 30 employees whose roles will dramatically change following the review, which will result in the retailer having a much smaller in-house technology team.

A spokesman confirmed that Tata will replace M&S’s existing technology contracts with eight large suppliers, including Fujitsu, Sapient and Daisy, and will also manage the retailer’s contracts with small technology firms.

M&S said that it expected the changes to deliver annual savings of around £30m by 2021 after a one-off cost of £25m.

Steve Rowe, M&S chief executive, said: “We are committed to transforming M&S for our colleagues, customers and shareholders by delivering digital-first retailing across our stores and offices.

“Technology plays a huge role in this transformation – and having the right partners and model will enable us to be more agile, flexible and responsive.”

Under former boss Marc Bolland M&S committed £1bn of investment to modernising the retailer’s logistics and technology in order to catch up with the rapid growth of online shopping. However, there have been mixed results with critics saying that its expensive Castle Donington warehouse facility fails to live up to hopes that it would dramatically modernise its supply chain.

The retailer is now attempting to slash its £3.4bn cost bill by 10pc over the next five years as it faces a number of headwinds from rising wage bills, a weaker pound and business rates. The retailer is also grappling with shoppers shifting from the high street to online, which is putting further pressure on the performance of its vast store estate.

New chairman Archie Norman has also called a halt to new Simply Food openings amid slowing grocery sales.

M&S will reveal how it has fared over Christmas on Thursday.

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