Marks & Spencer has announced the completion of its joint venture deal with Ocado, which is part of its ambitious plans to grow its food business across the country.
The transaction has seen half of Ocado’s UK online grocery retail business (Ocado Retail Ltd.) sold to a wholly-owned subsidiary of M&S.
The groups confirmed that the business will not begin selling M&S products until 1 September next year, unless Ocado’s current arrangements with the Waitrose ends sooner.
From that date, over three quarters of the UK population will be able choose from around 6,500 M&S food products, in addition to Ocado’s current branded and own label offering. M&S highlighted that to date, access to its full range had been limited to around a dozen stores.
Melanie Smith, currently Strategy Director at M&S, has now been appointed as the CEO of the joint Ocado Retail unit. She is described as “a real talent; who combines extensive retail knowledge, strategic vision and a focus on delivery.”
Lawrence Hene, currently the interim Managing Director of Ocado Retail, will act as deputy CEO for a transitional period before he moves back into a senior role within the main Ocado group.
The other directors of the Ocado Retail unit are Tim Steiner and Duncan Tatton-Brown, respectively Chief Executive Officer and Chief Financial Officer of Ocado, and Steve Rowe and Stuart Machin, respectively Chief Executive Officer and Food Managing Director of M&S. Steiner will also be Chairman of Ocado Retail.
Steiner commented: “Ocado Retail’s future, as part of a joint venture with M&S, is full of opportunity. The new company will be able to offer customers even greater range, service, quality and value. Our collaboration will also allow us to grow the business faster, add more jobs, and create more value for all our stakeholders. We are very excited to be working together.”
M&S’s Rowe added: “I have always believed that M&S Food could and should be online. The addition of Ocado to our family of businesses marks M&S’s first truly transformational step in shaping our future as a digital first retailer, as we combine the magic of M&S food with Ocado’s award-winning service to create a new and compelling proposition.
“Through its unique OSP technology, Ocado has developed the most cost advantaged model in online grocery retail and our new partnership unlocks growth for M&S Food through an immediately profitable, scalable presence in the UK’s fastest growing grocery sales channel.”
The company stated that it expects Ocado Retail to generate around £70m of synergies for M&S Food by the third-year, with savings coming from a combination of increased buying scale, improved sourcing economies, and a reduction in product trial and development costs.
Related item:
Marks & Spencer Wants Bigger Food Share (With Help From Percy Pig)
After two years of falling food sales M&S is fighting back with larger stores, lower prices and family-sized food packs. And giant, oinking Percy Pigs – see The Guardian website
NAM Implications:
- The stage is obviously set, with over 12 months notice…
- Are prepared to play your part in optimising…
- …what is a patently a step change in terms of providing access to the M&S offering…
- …for 75% of the UK population…
- …via a scalable business model.
- BTW, why stop at food?
