Marks and Spencer has reported a “difficult” third quarter as it was plagued by problems at its e-commerce distribution centre, which hit its online sales hard.
In the 13 weeks to 27 December 2014, the company reported a 5.9 percent decline in online sales, contributing to a 1.6 percent fall in overall group sales. In contrast, other retailers that have provided Christmas trading updates earlier this week, including Sainsbury’s, John Lewis and House of Fraser, have all seen an uplift in online sales.
Marc Bolland, M&S chief executive, said, despite “record” Christmas sales: “We had a difficult quarter in general merchandise, dominated by unseasonal conditions and an unsatisfactory performance in our e-commerce distribution centre.”
In the critical shopping period leading up to Christmas, Marks and Spencer was forced to extend delivery times to up to 10 days for online orders as it tried to cope with a backlog created by a successful Black Friday to Cyber Monday shopping weekend.
All online orders, whether sent to Marks and Spencer stores or to directly to customers, are sent from the retailer’s highly automated national distribution centre (NDC) in Castle Donington, Leicester. When the distribution centre opened in 2013, it was beset with major IT supply chain problems.
In its results today, Marks and Spencer said that its new website - which it warned at the relaunch in May would take about six months to settle in - performed “well operationally, even through peak demand”. It measured the success on metrics such as customer satisfaction and conversion, which it said “continued to improve”, leading to a sales growth through October and November.
“However, disruption at our distribution centre in Castle Donington strongly impacted .com and in turn, GM [General Merchandise] performance in December,” Marks and Spencer said, in reference to the Black Friday effect.
It insisted: “We have already made progress in addressing this and have now returned to our improved delivery proposition.”
Image credit: Marks and Spencer