Marks & Spencer has announced that it is to trial an online grocery delivery service this year, expanding into an area that it has famously resisted.
So, what’s behind the decision? And will M&S become an actual contender in the competitive grocery market as a result? Here’s a bit more on the story and what it might mean for the brand.
Growing UK delivery sector
According to IGD, Britain’s online food market is expected to nearly double to £17.2bn by 2020. It’s not just the big supermarkets that are involved, of course. The likes of Deliveroo and HelloFresh – companies that offer takeaway options and at-home recipes kits – are also taking a slice of the pie.
Meanwhile, M&S has been missing out.
Despite the retailer’s previous insistence that its product-range and basket-size is too small to offer a legitimate and price-worthy service, the emergence and popularity of the delivery market is bound to have been a factor in its decision to get involved.
The question is – how will M&S convince customers that it’s worth paying for a proper delivery?
Changing consumer perceptions
With its ‘dine in for 2’ range, M&S Food is typically seen as a top-up shopping option or a special occasion store. That being said, it is a very profitable one, with M&S’ clothing business dwindling in light of the success of its food arm.
Last month, the retailer confirmed it was opening an additional 34 food shops following a review of its UK store portfolio. Meanwhile, it already operates an ecommerce service for its wines by the case, as well as party food, homeware, flowers and other non-food items.
As well as a focus on physical stores, M&S has also been concentrating on food in marketing terms. Interestingly, news about its delivery trial aligns with a new campaign that aims to get consumers to think of Marks and Spencer in a different light.
The ‘Spend it Well’ campaign is more about promoting brand values than its product-range, telling consumers that life is too short not to spend time and money on the things that matter the most.
This, alongside clear investment in physical food stores, is perhaps a sign that M&S is serious about getting consumers to view it as more than just a place to pick up a sandwich.
So, back to the biggest obstacle of a viable business model.
According to reports, M&S is currently in talks with Ocado about a potential partnership to handle order fulfilment. The most likely scenario would also involve M&S products being available on Ocado’s website, rather than a new standalone website being set up for M&S.
This would solve the problem of small-basket values, giving consumers the option to pick and choose from Marks and Spencer alongside other food brands.
However, with Ocado currently having a deal in place with both Waitrose and Morrisons, it’s not yet clear whether it’s actually possible to bring M&S into the mix. Ocado’s current contract with Waitrose specifies that 70% of all non-own brand products sold have to come from Waitrose. If M&S is classed as a brand – the deal will be unable to go ahead.
With a proper logistics model, success with online grocery delivery is not totally implausible for M&S.
Even if consumers do not buy into the idea of a weekly shop, perhaps the introduction of speciality delivery services could prove enticing. If the popularity of its seasonal food is anything to go by – with Christmas and Easter ranges typically seeing shoppers flock to buy a large amount of ingredients in one go – consumers are likely to lap up the added convenience if it is on offer.