Blog: Dean BestM&S could face questions over long-term online food strategy

Dean Best | 20 May 2013

When Morrisons makes its first home deliveries in January, Marks and Spencer will be the only major UK food retailer not to have a full online grocery service. M&S's food arm has been ticking over nicely and much of its focus is elsewhere but the retailer could face questions over its online plans for food when it reports its annual results tomorrow.

M&S customers can order food online for delivery to stores but the retailer does not offer a full home delivery service like its major rivals, competitors that now include Morrisons after its distribution and technology deal with UK online specialist Ocado.

When he was at Morrisons, Marc Bolland, now M&S chief executive, was reluctant to take the UK's fourth-largest grocer online. Now at M&S, the Dutchman is still said to be unsure about the benefits of launching a full online grocery service, questioning the return on investment.

Tomorrow, when M&S reports to the City, a lot of attention will be on whether the retailer is seeing improvements from its clothing business. Its food division has performed well in the last 12 months (Q4 food like-for-likes were up 4%). But that does not mean industry watchers will not be wondering what M&S's plans are for online grocery - especially as there is speculation Morrisons' deal with Ocado could spell the end of the online specialist's deal with another upmarket UK grocer in Waitrose.

 

For its part, Waitrose said little about the Morrisons/Ocado venture, revealing only it had asked lawyers to look into the agreement to see if it breached its deal with the online specialist. The Waitrose/Ocado deal runs until 2020 but there is a break clause that allows Waitrose to walk away in 2017.

The upmarket retailer refused to comment on whether it would activate the clause but there is a feeling in the City it could quit the deal in four years time, leaving Ocado with a potentially big hole in its sales.

If Waitrose walks away, could that hole in time be filled by M&S?

 

 


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