M&S prepares for online shopping after sealing 50% stake in Ocado

M&S strategy director Melanie Smith becomes Ocado Retail chief executive.

Ocado: current ad campaign by Now
Ocado: current ad campaign by Now

Marks & Spencer has taken a decisive step towards making its food range available to online shoppers next year by closing a deal to form a joint venture with Ocado.

The deal announced in February will see M&S' products become available from the online supermarket from next September, bringing to an end Ocado's longstanding relationship with M&S' upmarket rival Waitrose.

M&S has paid an upfront £562.5m, with a further £187.5m conditional on performance over five years, for a 50% stake in Ocado Retail, the UK grocery retail arm of Ocado Group.

M&S chief executive Steve Rowe said it "marks M&S’s first truly transformational step in shaping our future as a digital first retailer".

As things stand, Ocado Retail will continue to offer its customers Waitrose’s products until their partnership expires on 1 September 2020.

M&S products will be available from September 2020 "at the latest", according to the announcement by M&S and Ocado this morning.

The 50/50 joint venture will be led by Melanie Smith, currently the strategy director of M&S, as chief executive with effect from 1 September this year.

Smith was appointed by Ocado Group, and in turn, Ocado Group chief executive Tim Steiner has been appointed by M&S as chairman of Ocado Retail.

Smith joined M&S in May 2017 as a strategy director accountable for strategy and M&S Bank and energy. She was previously a partner at McKinsey, spending 12 years developing and implementing strategies for retailers and FMCG companies on every continent.

Her past roles include marketing & strategy director at Bupa and executive director of operations and integration at TalkTalk.

M&S said its full range of 6,500 food products has been limited to around a dozen stores but would be available on Ocado.com alongside Ocado’s exclusive brands and own-label products, as well as popular branded goods.

Rowe added: "Through its unique 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.

"I am absolutely delighted that our JV will be led by Melanie. She is a real talent, who combines extensive retail knowledge, strategic vision and a focus on delivery."

Steiner said: "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."

M&S’ food sales have been declining, with a 3.6% drop year on year for the 12 weeks to 13 July 2019 according to Nielsen. 

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