M&S look to cut out middlemen to reduce costs
Troubled high street retailer Marks & Spencer is looking to increase the number of suppliers it deals with directly in a bid to cut out middlemen and reduce costs, it emerged today.
The group is looking to deal with up to 20% of its suppliers direct, as it works to improve its margins by at least 1% a year.
Although most of M&S’s clothes are produced overseas, it still buys them through through UK suppliers, who take responsibility for the clothes meeting M&S’s standards.
But the Sunday Times reported that chief executive Roger Holmes has concluded that the only way the group can compete with rivals such as Next and Debenhams is to reduce supply, distribution and staff costs.
He is expected to use the group’s full-year results on May 25 to announce plans to increase the company’s efficiency drive, including increasing the number of suppliers it deals with directly.
An M&S spokeswoman said: “Our aim is to improve our margins by 1% year-on-year for the three years up to 2006.
“We have also stated that we see opportunities for up to 20% of our manufacturing operations to be dealt with direct.
“However, it is important for us to maintain approximately 80% of our supply chain through suppliers who fully service our manufacturing requirements.
“We never comment on the contractual arrangements that we have with our suppliers. This is our normal practice as these arrangements are confidential between our suppliers and us.”
Meanwhile speculation continued over who is likely to replace Luc Vandevelde as chairman of the group.
Shareholders are reported to be keen for the company to appoint a retailer, rather than someone from the London City market.
But the group is reported to have cooled towards Stuart Rose, the former boss of Arcadia, Booker and Argos, who had been tipped as the likely successor to Mr Vandevelde.
Other candidates who are still thought to be being considered for the job are former Vodafone boss Chris Gent, mm02 chairman David Varney and chairman of Woolworths Gerald Corbett.
M&S has appointed headhunters Russell Reynolds to find a replacement for Mr Vandevelde.
Last week the group announced it had appointed Kate Bostock, a product director for Asda’s George collection, to take over from Steve Longdon at the helm of its womenswear department in a bid to revive flagging sales.
Last month it reported a 0.4% fall in like-for-like sales over the past year, as new formats and clothing ranges failed to boost demand at its womenswear division.
