Marks & Spencer has for years failed to set up an online grocery delivery service.
But a rumored deal with Ocado could give M&S the boost it needs to finally catch up.
The high street stalwart’s plan to launch a £1 billion food delivery service with the online grocery delivery company was reported by The Mail on Sunday this week.
If a deal is made, M&S could look to replace Waitrose as Ocado’s key partner and buy up vans, lorries and distribution centers from the delivery business.
Marks & Spencer needs a online food delivery service
Though Marks & Spencer has experimented with online food deliveries since 2017, it has not reached the behemoth level of its competitors, such as Asda,
As shoppers become increasingly reliant on online food delivery, especially same-day services such as Amazon Fresh, M&S can no longer afford to miss out on the opportunity. Without a substantial food delivery service, the high street retailer is overlooking a market valued at £11.4 billion by research company IGD last year.
However, with the rumors of an Ocado partnership, M&S’s chairman Archie Norman appears to be making it a priority to bring the company’s food delivery offering up to scratch.
Marks & Spencer and Ocado partnership makes sense
There’s no doubt that some form of tie-up with Ocado would be hugely beneficial to M&S. It is the logical choice of partner to enter the online marketplace: it has a proven track record of helping retailers build their online delivery operations and the timing is near perfect.
M&S offers a notoriously poor online user experience for its clothing and homeware. With Ocado, it could skirt around the problem of overhauling its entire online platform and instead piggyback on the systems already put in place by the delivery service. If a deal can be made, it could see Ocado take over the company’s food website, logistics, payment and delivery.
Ocado has also shown it’s the right choice for retailers who want to beef up their online services.
For decades, it has helped to make Waitrose’s deliveries process slick and smooth, and a similar partnership with Morrisons which started in 2013 has helped the supermarket to carve out a place in the online food delivery market.
M&S would be set to benefit from a similar uplift if Ocado can help bring the giant into the 21st century by getting their online deliveries sorted. And that just might help the retailer scrape itself out of its current financial difficulties.
On the surface of it, the benefits for Ocado are not as clear-cut.
However, it has been pushing to expand globally. In the past two years, it has sold its technology to retailers around the world, signing deals with Groupe Casino in France, Sobeys in Canada and the U.S. retail giant Kroger.
Tying itself to M&S in the U.K. would be a way for Ocado to keep a hand in the British market while it pursues international opportunities.