M&S to target millennials for online food deliveries

M&S are launching talks with Ocado about online food deliveries.
M&S are launching talks with Ocado about online food deliveries. PICTURE: ESMIE ALLEN
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It’s one of the nation’s favourite food halls with its seductive offerings for occasions ranging from dinner parties and brunches to a tasty dinner-for-one, luxury hampers and party platters, or just sandwiches for busy office workers.

But now high street stalwart M&S could be on the brink of offering shoppers online home delivery for the first time as shares in online grocer Ocado surged by 8 per cent yesterday morning following reports the two retailers are to launch negotiations about forming a food delivery team.

Last week M&S, who have long resisted the online trend, confirmed the launch of a “soft trial” online and home delivery services in the autumn.

However it now seems, despite its preference for catering for the “dinner for tonight” small basket customer, it has conceded it does not make economic sense to ignore the fastest growing section of the UK’s £180 billion grocery market.

Ocado already has a deal in place to deliver orders for Morrisons. But changes to the contract last summer meant it is no longer exclusively tied to Morrisons, and is only barred from working with supermarkets including Tesco, Sainsbury, Asda, Aldi and Lidl.

M&S is not included in that list, leaving the door open for a potential deal.

Last week fast food chain McDonalds said it would be testing home delivery across Britain in June.

Both Ocado and M&S declined to comment.

Speaking last week, Steve Rowe, M&S’ chief executive, said the company had been undertaking a review of food online, aware that its customers’ preferred method of shopping could change

“It has not cost us anything over the last five years by not being online with food. Our customers haven’t moved yet, but they will and we need to ensure that we are ready with the right response.

“There are unanswered questions over what this means for M&S.

Mr Rowe added: “The economics of food online are not straightforward and it is not something that we are going to rush into until we have substantial customer insight and a better understanding of what is right for M&S and right for our customers”.

Professor Paul Freathy of the Institute of Retail Studies at the University of Stirling said a deal made good business sense and that the store needed to embrace online shopping to attract a younger generation of shoppers.

“This allows M&S to tap into an existing distribution market rather than doing it from scratch which strategically makes sense. It’s also a good move from Ocado’s point of view as it will link it to a major brand.

“At the same time this is an attempt to attract a new demographic of customer. They have their loyal band of customers who shop there week in week out and some will shop online, but they need to win over younger, technically-savvy shoppers who value quality food but don’t have the time to go into town to shop.

Prof. Freathy added: “M&S can’t go on denying this major channel, it’s a weird commercial practice to ignore the online market. It is reminiscent of them around 15 year ago when they were really reluctant to let customers use credit cards such as Visa and Mastercard and wanted cash, cheques or the M&S card instead.”