Marks & Spencer suppliers are beginning to feel the pinch as its strategy to directly source 60% of its clothing within the next three years takes hold.
Industry sources have told Drapers redundancies have been made, or are about to be made, at two of M&S’s largest suppliers - Dewhirst and Courtaulds - as a result of the chain moving its manufacturing direct to factories.
Drapers understands up to 80 redundancies were made at Dewhirst over the last couple of weeks as a result of M&S outsourcing its manufacturing to Bangladesh.
Industry insiders have also indicated Courtaulds staff have been placed on a 30-day consultancy period, with one source claiming up to 70 jobs could be lost. It is thought The Fielding Group has also been affected.
Dewhirst declined to comment and Courtaulds did not respond to requests for comment.
The move follows the appointment of brothers Mark and Neal Lindsey as sourcing directors for general merchandise at M&S in March, as the company seeks to claw back margins.
The Hong Kong-based brothers were tasked with overseeing M&S’s network of regional sourcing offices around the world to improve its bottom line. Both were previously responsible for the growth of Next Sourcing, which streamlined Next’s supply chain to improve speed and efficiency.
Israeli suiting manufacturer Bagir Group has already fallen foul of the new approach, with M&S cutting orders in May, causing the newly listed company to issue a profit warning. M&S was Bagir’s biggest customer, accounting for more than a third of its revenue.
One Bangladeshi supplier, who works with UK high street retailers, said: “[M&S] is pulling out and it’s starting to hit home. Dewhirst has lost a huge amount of business on formal shirting. The aim is to increase margins and the Lindsey brothers are the ones to do it.”
Another source said there were a few “big losers” but added suppliers had been given ample notice.
“Dewhirst is a big loser in this and [another supplier] The Fielding Group has been hit hard as they were doing a lot of kidswear and uniforms, but that has been taken away now. M&S has been honourable in warning its suppliers about the move in-house, but a lot of them didn’t believe it as M&S has said it before and it didn’t happen.”
One manufacturer who has factories in India said the move in-house was crucial if M&S was to turn around the struggling fashion department, but that a stronger design team was also needed.
She said: “M&S is going direct on its basics for better prices. Cutting out the middle man is fine on basic pieces but on more fashion-forward styles they will really struggle as the design team is not strong enough.”
Another supplier said: “It’s a big deal for suppliers and it costs jobs in Britain. That’s the way the industry has been moving - retailers will buy direct and cut the middle man out as they need to justify how much they are spending on their design departments.”
An M&S spokeswoman said: “In May we shared our plans to move more of our sourcing to a direct model as part of plans to improve margins within our general merchandise business and are working closely with our suppliers to achieve this.”