Marks & Spencer Strikes Online Grocery Deal with Ocado

Wednesday, February 27, 2019 - 10:03 by Paul Tissington

Ocado is tying itself closely to retail chain Marks & Spencer as part of a £750 million deal which will see M&S take a 50 per cent stake in the grocery delivery firm.

This move comes as Ocado’s tie-in with Waitrose concludes next year, and it will subsequently be able to sell food products branded by M&S to customers via safe shopping online.

An advantage of this partnership will be that M&S will be able to offer e-commerce access to its grocery range to millions of customers across the UK, with chief executive Steve Rowe saying that he had always harboured ambitions of making the leap into online food selling.

By pairing with Ocado, which has been operating in the e-commerce space for well over a decade, M&S will be able to get off the ground with no major hurdles to overcome and can scale its online offerings to fit the amount of demand that it sees from customers.

An important aspect of this deal is that Ocado’s food delivery service will be partly portioned off, leaving its tech-based arm to operate independently. This could give it much improved agility and allow it to court customers in other parts of the world with its cutting-edge solutions, all of which are still focused around retail distribution.

M&S has found that its food services are amongst its most profitable and sustainable offerings, so it makes sense to expand into the online space rather than strictly limiting itself to bricks-and-mortar stores.

E-commerce sales still make up a fraction of the UK’s total food market, yet this area is growing faster than any other, and most of the major players have long since jumped on the online bandwagon to benefit from wider access to customers.