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It has been a month since the extremely bullish £750m+ tie-up between M&S and Ocado was confirmed in the press. Admittedly, the talks between “Mango” and “Apricot” (the charming respective code-names) were never the grocery sector’s greatest secret, with speculation being ever present over the past few months. Waitrose will exit the Ocado fulfilment offering in September 2020 and M&S will join… in a very well publicised JV capacity.

I must admit that I am still a little stumped as to what’s in this deal that will enable M&S to hit the “weekly shop” objective that has eluded them for so long. Of course, it potentially solves the fulfilment capability in a stroke, but it does not instantly change the market perceptions of:

  • Comparatively expensive
  • Limited ranges
  • Non-family orientation

But us observers love chutzpah when it comes to big industry moves… and this one is going to prove very interesting. In this two-parter, I will look at potential causes that could have impacted this change. New call-to-action

1. Good or bad for customers?

The plethora of tweets from staunch Waitrose supporters range from slightly over-obsessive to well-grounded and practical, particularly when loyal Ocado shoppers cite that home delivery to their location is not available through the standard Waitrose.com offering.

Waitrose has already committed to a doubling of its delivery operations in a move to allay existing customer fears. How soon these changes will come into play and deliver measurable value is unclear, but what is clear is that it is a hole that could not remain unplugged for any great length of time.

Ocado, on the other hand, remains sanguine when it comes to the perceived negatives of the new venture. And I would hazard that as a “tech company” this will be down to their ability to focus on both delivering AND evolving the next phases of their capability. And in this case, it’s in tandem with a new partner who is finally opening the digital channels needed for so long.

So, on face value, a win for both M&S and their customers … although some investment analysts may disagree!


2. Quality is always a good starting point

Ocado as a brand is incredibly strong. Why is it when you are talking to someone who shops through them, they simply must tell you when they are waiting for an “Ocado” delivery?

M&S is equally as strong, but as a grocer (in the context of this piece) the brand strength really shines within certain strands of market perception. Not that I am a loyal M&S shopper, but they are unparalleled in the creation, marketing and quality of the convenience meal. (And I am sorry if you are a Waitrose blue blood, but M&S is better!)

When it comes to the aisle, both M&S and Waitrose regular ranges are comparable in both quality and “more or less” on point price-wise. Whilst considered more expensive, both stores let the product do the talking. There will always be bickering in the press on the price thing… both company CEO's have been niggling at each other on this for weeks now.

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But range count at M&S is regarded as low. They state that it is currently between 6500-7000 but they know that customer perception here is far lower than it should be. Their ongoing store realignment programme is designed to achieve a number of efficiencies and commercial goals; one of those being the increased visibility of food lines as part of the customer experience.

Increasing awareness, familiarity and encouraging purchase habit through increased footprint is a slow burn process, made more difficult in that you must persuade customers to commit “aisle time” away from other stores they more readily associate with the weekly shop.

And of course, it is not just Waitrose at the heals… customers from all spectrum's are becoming increasingly savvy in terms of the “product value” easily obtainable from the discounters. It’s not just about price anymore.

I will be exploring more points in the second part of this blog which you can check out here.

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