Why a tie-up between Marks & Spencer and Ocado makes sense
It was back in 2008 when the then commercial food director of Marks & Spencer (M&S) said that the retailer was: “Considering adopting a model similar to Ocado, a company that delivers groceries on behalf of the supermarket Waitrose.”
Marks and Spencer partnering with Ocado makes sense says Catherine Shuttleworth
In the intervening 11 year period, the retail market in food has completely transformed - M&S have seen off three chairmen and three chief execs, but still haven’t delivered any online food offering.
Whilst sometimes there is real merit in zigging whilst others zag, Archie Norman and his new experienced team in food, lead by Stuart Machin and soon to be joined by Tesco star George Wright, know that the M&S food business needs a radical solution to capture the hearts minds and stomachs of younger shoppers. There’s no point hoping that they can just wait for the shoppers to roll up to M&S stores - that’s just not happening. So a deal with Ocado makes sense, saves time and money. M&S are out of the trap quickly and have a whole new massive group of digital savvy shoppers to go for, with positive attitudes to home delivery and a relatively high grocery spend.
And for Tim Steiner and his team, a deal could let them crack on with selling their tech solutions to retailers across the globe without being held back and distracted by the day to day of the Ocado UK retail trading business. With a new shiny exciting partner with a stated intention of growing through digital, they can cut the ties with Waitrose, a partner that they have never really fallen in love with. Their differences of opinion have been many and public over the last seven years.
So will it be enough to create a lever of growth for M&S? Well, that remains to be seen but doing nothing isn’t an option. Amazon are on the prowl and they have to strike soon or could miss their moment in UK grocery. Amazon Prime is fast becoming a meal for tonight delivery service, but they still haven’t cracked a fresh grocery delivery supply chain that UK consumers can trust.
Of course, Morrison’s are right in the middle of all of this - both with their supply deal with Amazon and their tech solution deal with Ocado delivered by Morrison.com. Possibly not the spot they’d choose.
And Waitrose, well they might put a brave face on things, but this will be a blow. Already losing sales to the discounters, the thought of M&S now sweet talking Waitrose shoppers is going to be a bitter pill to swallow.
I look forward to finding out what M&S and Ocado have cooked up.
Catherine Shuttleworth is the CEO and founder of Savvy Marketing