M&S braced for 'significant' supply chain cost rise

11 November 2021

Marks and Spencer (M&S) is planning for “significant supply chain cost increases” as driver and labour shortages continue.

Delivering its half-year results, the high street retailer said it was offering incentives as part of a driver recruitment initiative, as well as making changes to deliveries and warehousing processes to combat the challenges.

M&S said: “As widely reported, there are growing issues of driver, warehouse and supplier labour shortages creating additional pressures for all retailers, including M&S.

“We have a number of recruitment initiatives which include targeted incentives for drivers. We are also increasing truck, cage and tray fill, and resetting delivery schedules and depot picking processes to help manage the pressures.

“We are planning for significant supply chain cost increases in the second half of the year with further on-costs next financial year. However, because of our concentrated supplier base and much improved working relationship with our logistics partner Gist, the food business is comparatively well placed for these challenges.”

In September M&S said it was closing 11 franchise stores in France due to “lengthy and complex export processes”.

M&S said border processes in place since Brexit were “significantly constraining the supply of fresh and chilled product from the UK into Europe and continuing to impact product availability for customers”.

Despite the ongoing supply chain challenges, pre-tax profits for the six months to October were £187.3m. This compared to a loss of £87.6m for the same period last year.

In results for the year to September 18 Primark owner Associated British Foods said in recent weeks it had experienced temporary closures at dispatch ports, limited sea container availability and congestion at destination ports, and that was having an effect on stock.

“These disruptions have delayed both the handover of inventory from suppliers and the shipping and delivery of inventory to store,” the company said.

“We are closely managing this with the support of our logistics providers, taking advantage of our scale and efficient warehouses, and we are prioritising the product most in demand. Although, at this point, the disruption is causing limited availability on a small number of lines, our warehouse inventories give us stock cover on the majority of lines for the important Christmas trading period.”

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