After weeks of speculation, during which one of Ocado’s distribution centres burned to the ground, High Street stalwart M&S has stuck its neck out and penned a deal with Ocado that will enable it to sell its groceries nationwide for the first time.
It has been dubbed a ‘transformational’ partnership for the grocery sector, and is a characteristic move by M&S’s veteran chairman Archie Norman, who had been expected to be dynamic in his dragging of the retail juggernaut into the 21st century.
‘It is the biggest and boldest moment so far and a game changing moment for reshaping M&S,’ thundered CEO Steve Rowe.
Bosses of both firms defended the deal
Retail analyst Nick Bubb added: ‘M&S still haven’t proved that they can generate a high enough shopping basket to make Online grocery pay, so this seems a huge leap in the dark for them.’
At a press conference today, M&S’s Rowe fiercely defended his decision and said: ‘We believe we got a fair price. This is not about the short term. This is about the transformation of M&S.
‘I would not go online if it was unprofitable to do so and would destroy shareholder value.’
He reasserted that the retailer was set to benefit from £70million in synergies within three years, mostly through greater buying power, and argued that it was necessary to buy into a joint venture for the deal to be truly ‘transformational’.
‘If you’re just a supplier, you can’t really drive the direction of the company,’ he said.
Steiner said it was a ‘win win’ deal too. ‘M&S is buying a business that’s already profitable and already customers’ favourite. If anything we should have charged them more!’ he said.