«Breaking News» Shoppers' agony as M&S enter partnership with Ocado to deliver the firm's food nationwide

For years they have relied on Ocado to source their marinated artichokes and fresh gnocchi.

But now well-heeled Waitrose customers who use the online delivery service face having to change providers – or pay a small premium – to stock up for their dinner parties.

Yesterday Ocado announced it had cut ties with Waitrose after 19 years – to sign with the middle-class favourite's arch-rivals Marks & Spencer.

Ocado, which stocks its own-brand goods as well as Waitrose's, struck a £1.5billion deal with M&S.

The major shake-up of the grocery market will take effect next year, when Ocado's deal with Waitrose expires.

Steve Rowe, CEO of Marks and Spencer described the deal with Ocado as the firm's 'biggest and boldest move' and a 'game-changing moment'

Ocado announced it had cut ties with Waitrose after 19 years – to sign with arch-rivals Marks & Spencer in a £1.5billion deal

M&S chief executive Steve Rowe said: 'This is [our] biggest and boldest move to date and a game-changing moment.' 

The deal will see M&S pay Ocado £750million for a 50 per cent stake in the joint venture. 

But, despite Mr Rowe's insistence it would help M&S bring down prices, the tie-up raised fears of hikes.

For example, a 500g punnet of green grapes sold at an M&S store costs £2.50, compared with £2 for the equivalent Waitrose product sold on Ocado.com. 

The ups and downs of one of Britain's most iconic retail brands

Marks & Spencer was formed in 1884 when Michael Marks opened a market stall in Leeds, with the slogan ‘don’t ask the price, it’s a penny’.

The Polish refugee went into partnership with Thomas Spencer and in 1904 Marks & Spencer opened their first shop in a covered arcade in the city.

Marks was from a Jewish family that fled the Russian Empire, in what is now Belarus.  

In the 1920s the store adopted the revolutionary policy of buying directly from suppliers. 

M&S opened its first Asian store in Kabul, Afghanistan, in 1960 and the company then moved into Canada in 1973 as part of an international expansion.

By the late 1990s the firm was experiencing financial problems and the company's share price fell by more than two thirds.

Its profits fell from more than a billion pounds in 1997 and 1998 to £145 million.

Since 2009 the company has undergone constant restructuring with a number of store closures and re-branding of its clothing lines. 

A 250g pack of organic salted butter costs £1.90 at M&S, compared with £1.80 for the Waitrose version at Ocado. And a 1.5kg bag of self-raising flour is sold for 65p at M&S, while Waitrose's costs 54p.

James Anstead, an analyst at Barclays, said: 'Waitrose is regarded as being premium, but M&S is widely seen as super-premium. 

This means that some customers might feel they could not afford to continue shopping at Ocado.'

Ocado chief executive Tim Steiner said his customers are 'looking forward to getting their M&S Percy Pig sweets'

The new deal will see M&S pay Ocado £750million for a 50 per cent stake in the joint venture in online delivery service 

Fraser McKevitt, an analyst at Kantar Worldpanel, said: 'Ocado needs to ensure shoppers aren't left disappointed.'

Ocado faced an instant backlash on social media. One customer wrote on Twitter: 'You'll be losing us as weekly customers ... M&S don't provide a full range of lines and their food is too expensive and poorer quality.'

How Ocado led the way in the grocery home delivery sector 

The name 'Ocado' is said to be a made-up word to evoke images of fresh fruit - derived from 'avocado'.  

Ocado was founded in April 2000 by Jonathan Faiman, Jason Gissing and Tim Steiner, former merchant bankers with Goldman Sachs.

The online delivery firm was launched in January 2000 as a concept and started trading as a business in partnership with Waitrose in January 2002. 

Chief executive Tim Steiner is said to be worth £116million and the company's share price soared 80 per cent when a deal with US retail giant Kroger was announced last May.

Ocado's products include own brand groceries from the Waitrose supermarket chain as well as their own Ocado brand, but also a selection of name brand groceries. 

In May 2010 the John Lewis Partnership entered into a ten-year branding and supply agreement. 

Since January 2014, Ocado have been delivering online groceries for one of their main grocery rivals Morrisons supermarkets.

Rumours first started of a secret deal between Ocado and M&S last month.

Ocado chief executive Tim Steiner said he was confident it would gain new customers, adding: 'They've told us that they are looking forward to getting their M&S Percy Pig sweets.'

Waitrose plans to double online sales using its own delivery service. 

But Mr Anstead cautioned: 'We do not know whether Waitrose.com has the capacity to actually serve the Ocado customer base.'

Shoppers loyal to Waitrose and those fond of Ocado's mix of own and name brand products said they may defect to rivals after the new deal was announced. 

Chris McCausland wrote on Twitter: '@ocado i've been a customer for many years, and love the service. 

'I just won't be able to continue if you stop selling Waitrose products. 

'I'm afraid it just won't work for me, and I'm sure it won't work for a lot of other people as well. I hope this turns out not to be the case.'

Niamh Skinner wrote: 'For god's sake @ocado my mum's in tears, used Ocado for 15 years, and your 'consciously uncoupling' with Waitrose for M&S means she has to 'consciously uncouple' with you. She's absolutely devastated.'

Another Twitter user said: 'Thanks for the heads up. Hate M&S so you'll be losing our business. 13 years ordering Waitrose and Ocado products. 

'Not sure how you think this will work. Watch the average weekly spend plummet and your regulars move away.'

Rashida Abdulai added: 'Excited about finally being able to have yummy @marksandspencer groceries delivered, by none other than the brilliant @ocado! Great move as far as I’m concerned.'

One social media user said: 'Ocado I have used you faithfully for years as I like the combo of own brand, branded and Waitrose products.

'I am not at all happy that you will replace Waitrose with Marks & Spencer. May have to defect to Sainsbury's.'

Link hienalouca.com

https://hienalouca.com/2019/02/28/shoppers-agony-as-ms-enter-partnership-with-ocado-to-deliver-the-firms-food-nationwide/
Main photo article For years they have relied on Ocado to source their marinated artichokes and fresh gnocchi.
But now well-heeled Waitrose customers who use the online delivery service face having to change providers – or pay a small premium – to stock up for their dinner parties.
Yesterday Ocado announced it had ...

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