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.