Nicholas Carroll
Associate Director - Retail, Nicholas Carroll has a particular flare for the grocery industry but analyses and writes in-depth reports on a range of UK and European retail markets.

M&S products are finally live on Ocado this week, marking the start of a new chapter for both retailers. 

When it became clear that its partnership with Waitrose was ending, Ocado could not have wished for a better replacement than M&S. Its former and new partners both occupy upper-middle to premium positions in the market and whilst some Waitrose shoppers may follow the business to its dedicated platform, this will be more than made up for by the new audience M&S will bring. The brand recognition and audience that M&S will bring cannot be underestimated, not least because the M&S products will only account for 10% of the product offering on Ocado.

The fact that Ocado and M&S will be equal partners in a new joint venture means that this is far more than simply a supply deal for Ocado. It is the world leader in online-only grocery distribution, but M&S stores will, in time, give the business space to operate store-based distribution for the first time. This will allow it to reach near-national coverage more quickly and will be crucial in accelerating the expansion of its smaller-basket same-day service, Zoom. 

For M&S, its long-overdue move to online was significant when first announced 18 months ago, but is now critical. COVID-19 has seen online grocery demand soar, with sales via the channel up 45% year-on-year between March and July 2020. What’s more, Mintel’s COVID-19 tracker shows that the number of people doing more online shopping than usual has in fact risen over the last few months, despite lockdown restrictions being lifted. 

The partnership finally gives M&S a significant online arm having attempted to offer some online options via Deliveroo in the intervening period. With a decent percentage of M&S consumer base aged over 65, a group where concerns around the virus remain particularly high, this is a much-needed outlet for the business. 

But while the move will have an immediate impact on M&S, this is not just a reactionary decision. It is one that longer term will help the business realise its goal of shifting from being a ‘secondary’ or top-up grocery destination to capturing more ‘big-basket’ demand. 

Indeed, in 2019 just a small proportion of grocery shoppers said they spent the most in a typical month in M&S, and this is what the business aims to change. The Ocado deal and the business’ move to opening larger stores that allow it to stock its full range of grocery products are two significant steps towards achieving this change.