Ocado axes Waitrose deliveries – to strike deal with rival M&S
FOR years they have relied on Ocado to source their marinated artichokes and fresh gnocchi.
But now well-heeled Waitrose customers who use the online delivery service face having to change providers – or pay a small premium – to stock up for their dinner parties.
Yesterday Ocado announced it had cut ties with Waitrose after 19 years – to sign with the middle-class favourite’s archrivals Marks & Spencer.
Ocado, which stocks its own-brand goods as well as Waitrose’s, struck a £1.5billion deal with M&S.
The major shake-up of the grocery market will take effect next year, when Ocado’s deal with Waitrose expires.
M&S chief executive Steve Rowe said: ‘This is [our] biggest and boldest move to date and a game-changing moment.’ The deal will see M&S pay Ocado £750million for a 50 per cent stake in the joint venture. But, despite Mr Rowe’s insistence it would help M&S bring down prices, the tie-up raised fears of hikes.
For example, a 500g punnet of green grapes sold at an M&S store costs £2.50, compared with £2 for the equivalent Waitrose product sold on Ocado.com. A 250g pack of organic salted butter costs £1.90 at M&S, compared with £1.80 for the Waitrose version at Ocado. And a 1.5kg bag of self-raising flour is sold for 65p at M&S, while Waitrose’s costs 54p.
James Anstead, an analyst at Barclays, said: ‘Waitrose is regarded as being premium, but M&S is widely seen as super-premium. This means that some customers might feel they could not afford to continue shopping at Ocado.’
Fraser McKevitt, an analyst at Kantar Worldpanel, said: ‘Ocado needs to ensure shoppers aren’t left disappointed.’
Ocado faced an instant backlash on social media. One customer wrote on Twitter: ‘You’ll be losing us as weekly customers ... M&S don’t provide a full range of lines and their food is too expensive and poorer quality.’
Ocado chief executive Tim Steiner said he was confident it would gain new customers, adding:
‘They’ve told us that they are looking forward to getting their M&S Percy Pig sweets.’
Waitrose plans to double online sales using its own delivery service. But Mr Anstead cautioned: ‘We do not know whether Waitrose.com has the capacity to actually serve the Ocado customer base.’