M&S will gain a 50% share in Ocado’s UK retail business for £750m.
The joint venture will be known as Ocado and will deliver M&S products from September 2020 at the latest, when the current deal with Waitrose & Partners is due to expire. The deal will allow Ocado to supply its own branded products, M&S items and third-party branded items.
Ocado currently supplies about 4,500 Waitrose branded products, just under 10% of their 50,000-item product range. The joint venture would see these SKUs replaced with M&S goods. In a statement today, M&S referred to the venture as “a strategically compelling route to unlock growth for M&S Food through a profitable, scalable presence in the online grocery market, the UK’s fastest growing channel.”
The view from the top
M&S chief executive Steve Rowe said, “I have always believed that M&S Food could and should be online. Combining the strength of our food offer with leading online and delivery capability is a compelling proposition to drive long-term growth.”
Ocado CEO Tim Steiner said, “The combination of Ocado and M&S will allow us to grow faster, add more jobs, and create more value, as we lead the channel shift to e-commerce here in the UK. We are very excited by the many opportunities ahead.”
Supporting Ocado’s international ambitions
The joint venture will help Ocado implement existing international agreements to roll out the Smart Platform and build customer fulfilment centres (CFCs) e.g. Kroger in the US, Sobey’s in Canada, ICA in Sweden and Casino in France. In 2019, Ocado is forecasting capital expenditure of £350m driven by these Solutions agreements.