Posted on February 27, 2019 by staff

M&S finally goes online with £750m Ocado deal


Supermarket M&S is to finally sell its products online following the announcement of a 50-50 joint venture with digital grocer Ocado.

M&S said its previous trial was ‘uneconomic’ due to the high cost of manually picking from the stores and moving stock, and that developing its own tech and fulfilment centres would carry too much risk.

The deal comes shortly after Ocado announced losses of £44.9 million caused by investment in high-tech solutions.

It will see Ocado receive consideration of £750 million and gain exclusive rights to sell M&S’s full range of food and beverage products online and non-exclusive rights to sell M&S’s general merchandise products online.

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

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

The joint venture will allow M&S to cover 74 per cent of UK households.

It will also allow Ocado access to seven million members of ‘Sparks’, M&S’s loyalty programme, and three million active M&S Bank customers, together with its growing online database.

A statement to the London Stock Exchange said there is potential to build an integrated loyalty programme with strong insights and personalised rewards.

“We believe that this is the best outcome for customers, offering even greater range, service, quality and value; the best outcome for our Ocado Solutions partners, creating a stronger platform from which to innovate and develop our unique and proprietary technology,” said Tim Steiner, CEO of Ocado.