Word that Marks & Spenser which has been exploring online food delivery options to compete with rivals like Sainsbury’s could use services of Ocado had led to spike in its shares by nearly 6.7 %. Mail had reported last week that M&S may buy food distribution centers and vans from Ocado or allow the latter to stock its food or manage its online food order website but both companies have refused to comment on the rumors. Currently Ocado has a deal with Waitrose for food delivery which is scheduled to end in September 2020.
M&S started its experiment with food delivery business since 2017 on a trial basis in north London by offering limited range of ready meals while its website offers wedding cakes alcoholic drinks and party food. But it lacks a large network of food delivery trucks like Tesco, Asda, Sainsbury and Morrison. The firm is already struggling to manage its online food and clothing business as during the November holiday season its last quarter sales declined by 2.2 % while sales of food, clothing and home décor fell by 1.1 %. Both Ocado and M&S could work around two viable business arrangements say experts.
Ocado could do a similar work that it does for Morrisons which is taking over the food website and handling all activities from order taking to deliveries and payments. But the challenge could be baset sizes as shoppers are not likely to buy a week’s worth of food which will make deliveries expensive. Ocado could otherwise have a Waitrose like arrangement and just do deliveries which are more economically viable. The shares of M &S moved up by 2 % after the news article. These discussions are the latest effort by the firm’s head Archie Norman to make strong plans to reinstate its market position.