M&S Food is in the trial phase and looking to launch a full online offer in the second half of 2017. Here we analyse why the retailer might make the digital move and how it could fare in a highly competitive market.

M&S Food to Home

M&S Food currently trades a small amount of its food and drink offering online, but it is limited to entertainment food and wine, beer and champagne cases. The news broke in late April that M&S was planning to launch a full grocery offer online and M&S has since confirmed a team of executives were looking into the idea of launching online.

The second batch of rumours, coming just a day later, suggested that M&S would be partnering with Ocado for the deal and utilising its Smart Platform offering for potential online grocers (the same platform Morrisons uses for its online grocery service).

So why does M&S want to go online?

In recent years, M&S Food has been one of the best performing grocery retailers, and certainly the best performing part of the M&S business. However data from Mintel’s Supermarkets UK 2016 Report highlights that while 16% of grocery shoppers regularly shop with M&S in a typical month, just 1% said they spend the most with the grocer. Whilst this is perhaps unsurprising given that many M&S Food locations are small scale affairs, it does show that breaking out of the secondary shop category is essential for M&S’ future growth.

Online is one way in which M&S can do this. Despite advances in delivery times, and wider proliferation of delivery passes, online grocery is still best suited to serve larger basket orders – the main-weekly shop. By moving into online, M&S can serve bigger baskets to more customers, and possibly grasp a larger market share.

Would it work?

Looking at current users of online grocery, it is clear that M&S could find a place in the online market. M&S Food is pitched towards the higher end of the market – the same socio-economic groups that are also more likely to do all of their grocery shopping online.

Conversely, online grocery usage skews towards the younger generations, but it is over 55’s who are most likely to shop with M&S Food. While this may mean M&S has to work a little harder to appeal to the core younger online grocery shopper, it does present a major opportunity for the business to attract younger grocery shoppers. M&S has long struggled to bring younger customers into the business, particularly on the clothing side, and therefore online could be a real string in its bow in its efforts to better engage with the next generation of shoppers.

Senior Retail Analyst at Mintel, Nick Carroll currently writes a range of UK & European retail reports and is regularly called upon to comment on breaking retail stories in the UK’s leading media. Prior to joining Mintel Nick worked for over eight years in retail for both Jones Bootmaker and Barratts.

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