M&S draws up blueprint to boost Ocado deliveries
MARKS & Spencer’s chief executive, Stuart Machin, plans to turbocharge its Ocado food delivery operation as part of a sharp escalation in its battle with rival grocers.
Machin is embarking on a wideranging review to improve the service, make the business more efficient and spur growth. The overhaul is part of a wider strategy to increase M&S’s share of the UK’s food spending in stores and online by more than 25 per cent.
Hannah Gibson, the new boss of the Ocado Retail venture, is already spearheading the review just a month after her arrival. It is understood that she will draw up a blueprint to put more of M&S’s ranges on the Ocado website in an effort to compete with the likes of Waitrose and Sainsbury’s. At present 75 per cent of its food range is offered through Ocado. Executives want to increase that closer to 100 per cent in the coming months.
Bosses are particularly keen to make more products from the ‘Remarksable’ value range available on Ocado as soon as possible, to appeal to budget-conscious shoppers in the cost-of-living crisis. Gibson is also looking at how to improve ‘substitutions’ – alternative items delivered to customers when products they want are out of stock.
Sales of M&S goods since the launch of its joint venture with Ocado a little over two years ago have hit £1.3 billion. Machin told investors recently that opportunities for the service ‘haven’t really scratched the surface yet’.
One insider said he plans to grow Ocado Retail over the next five years to achieve ‘a market-leading national position in online food retailing and a brilliant showcase for the M&S brand and range’.
Ocado battled to keep up with customer demand during the pandemic
because it operates from distribution centres and warehouses and could not open new ones quickly enough to meet the surge in online orders. Rivals such as Sainsbury’s and Tesco pick goods from store shelves for online deliveries so were able to respond more rapidly.
M&S is now expected to capitalise on new Ocado distribution centres, including in Bicester, Oxfordshire, and Luton, Bedfordshire. It is aiming for 700,000 orders a week, up from 367,000 at the end of the last financial year in March. The review comes as the industry is under pressure due to rising energy bills, food price inflation and higher staff costs.
There are signs that customers have begun buying less and cutting the amount of food they throw away to save money.