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Marks and Spencer eyes £30m annual cost savings from digital-first retail push

High-street retailer has fleshed out plans to put digital at the heart of its business to boost operational efficiency in response to changing consumer demands

Marks and Spencer (M&S) claims that its push to become a digital-first business will save it £30m a year by 2021, achieved through operational efficiencies and simplified technology supplier relationships.

The high-street retailer has begun a five-year business transformation programme, announced in November 2017, geared towards streamlining its operations and increasing business agility in the face of growing competition from online retailers.

The company said repositioning itself as a digital-first business would enable it to make better use of its portfolio of stores in the UK, with some set for relocation, closure, renovation or expansion.

To support this, M&S said it is planning an overhaul of its websites to make them faster and easier for visitors to navigate. It also outlined its goal of making better use of the data generated by its Sparks loyalty card programme.

Following on from that, the company has revealed more details of how it plans to reorganise its business for the digital age, by publishing its Technology Transformation Programme.

Changes include the roll-out of an agile-focused Technology Operating Model from 1 March 2018, designed to generate “significant efficiencies” in how the organisation works and adopts emerging technologies. 

The company also plans to streamline its IT supplier base, having completed an “extensive” review of its digital capabilities before the Technology Transformation Programme comes into force.

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As a direct result of this work, M&S has appointed Tata Consultancy Services (TCS) as its principal technology supplier, which will assume responsibility for managing the company’s relationships with both core and specialist IT suppliers.

This will lead to about 250 M&S technology staff being transferred to work for TCS, under Tupe regulations. A consultation with those employees is set to begin on 16 January.

Meanwhile, a “smaller, more technical and commercially focused team” will be retained in-house, M&S confirmed.    

The new strategy will cost £25m to implement, and M&S claims it will yield savings of around £30m a year by 2021-2022.

M&S CEO Steve Rowe said the changes are part of the company’s commitment to deliver a digital-first retail experience across its 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,” he said. “Through our Technology Transformation Programme, our business will be faster, simpler and more focused on achieving a seamless customer experience.”

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