Marks and Spencer (M&S) is aiming to “transform online grocery shopping” for UK shoppers with a new 50/50 joint venture with digital grocer Ocado Group.
The joint venture (JV) will see M&S acquire a 50% share of Ocado’s UK retail business – which will be supported by the Ocado Smart Platform – for up to £750 million.
The deal brings together the strength of the M&S brand along with its food quality and innovation with Ocado’s propriety technology to create an “unrivalled online offer” for customers.
M&S said the deal is a “strategically compelling route” to unlocking growth for M&S Food.
The JV will trade as Ocado.com but benefit from access to M&S’s brand, products and customer database from September 2020, following the termination of the current Waitrose sourcing agreement and migration of JV sourcing to M&S.
“I have always believed that M&S Food could and should be online,” said Steve Rowe, M&S CEO.
“Combining the strength of our food offer with leading online and delivery capability is a compelling proposition to drive long-term growth.
“Our investment in a fully aligned joint-venture with Ocado accelerates our Food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way.
“Combining the magic of M&S Food with Ocado’s leadership in online technology allows us to transform UK online grocery shopping by offering customers the broadest, most innovative and relevant range in UK food retail with award-winning service.
“ Our partnership with Ocado will create shared value for our customers, colleagues, supplier partners and shareholders, operating with a common sense of purpose and values.
“This is a transformational step forward in shaping the future of M&S and in becoming a truly digital first retailer with at least a third of the business online.”
Tim Steiner, Ocado CEO said: “The combination of Ocado and M&S will allow us to grow faster, add more jobs, and create more value, as we lead the channel shift to e-commerce here in the UK.”