Ocado to deliver Marks & Spencer food as part of £750million home delivery deal

Marks & Spencer branch

ONLINE grocer Ocado is to start delivering Marks & Spencer food in a new £750million deal announced this morning.

M&S has previously not offered customers a home delivery option but the new service will be available from September 2020 at the latest.

Ocado delivery van
Ocado is to start delivering M&S food in a new home delivery deal

The deal could result in lower prices for customers and the possibility of Ocado-branded products being sold in M&S stores, according to the retailer.

It brings an end to Ocado’s long-running partnership with Waitrose, which had been coming up for renewal this week.

M&S will fund the deal by selling £600million of shares and by cutting its dividend payout to shareholders by 40 per cent, but it predicts it can achieve cost savings of up to £70million a year.

Yet M&S shares were down 7.5 per cent this morning following the announcement, while shares in Ocado were four per cent higher.

The boss of M&S, Steve Rowe, said: “I have always believed that M&S Food could and should be online.

“Combining the strength of our food offer with leading online and delivery capability is a compelling proposition to drive long-term growth.

“Our investment in a fully aligned joint venture with Ocado accelerates our food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way.”

Marks & Spencer branch
From next year customers can get their M&S groceries delivered to their homes

Tim Steiner, Ocado’s chief executive, said: “This is a transformative moment in the UK retail sector with the combination of two iconic and much-loved retail brands set to provide an unrivalled online grocery offer.”

Mr Steiner denied that Ocado was getting a better deal than its partner, saying: “It’s an absolute win-win when you think of the synergies that we bring to each other’s businesses.”

Meanwhile, Neil Wilson of Markets.com, said there was a risk that customers used to Waitrose products would ditch Ocado in favour of the supermarket’s in-house delivery service.

He added that M&S’s move was “certainly bold and it gets M&S in people’s minds for online groceries at last but it just smacks of paying too much and acting too late”.

And Martin Lane, managing editor of comparison site Money.co.uk, said: “Loyal M&S customers will be elated with the news the retailer is finally stepping into the digital age by joining forces with Ocado.

“This could be the boost that M&S need to lift their food business into the modern era rather than being a top up shop on the way home.

“Ocado has proved its delivery service can work and now everyone wants a piece of the luxury pie.”

With the help of robots, Ocado can put together a shopping order of 50 items within just five minutes.

Earlier this year, Tesco and Co-op also started testing robot delivery that whizzes groceries to your door in 15 minutes.

Meanwhile, Waitrose is trialling an “in-home” delivery service that gives drivers access to customers’ homes to unpack groceries while they are out.

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