Marks and Spencer Group Plc (M&S) has announced the completion of its acquisition of half of Ocado Retail Ltd, one of the world’s largest dedicated online grocery retailers.
This marks the start of M&S’s 50/50 Joint Venture (JV) with Ocado Group, comprising Ocado’s UK grocery retail business (“Ocado Retail Ltd”), supported by the Ocado Smart Platform (OSP) technology.
Ocado Retail Ltd will operate as a true partnership bringing together the strength of M&S’s brand and its leading food quality and product development, with Ocado’s proprietary technology and award-winning service to create an unrivalled online grocery offer for UK customers, including the 12 million M&S Food shoppers that currently account for a third of UK online grocery spend. To date, access to the full M&S range has been limited to around a dozen stores but from September 2020, over three quarters of the UK population will be able to shop over 6500 M&S food products via Ocado.com, alongside Ocado’s exclusive brands and own label products, as well as popular branded goods.
Following its completion, and in line with the joint venture agreement, Ocado Group Plc has appointed Melanie Smith, currently Strategy Director at M&S, as CEO of Ocado Retail Ltd. She will commence this role from 1st September 2019. The directors of Ocado Retail Ltd are Steve Rowe and Stuart Machin, respectively Chief Executive Officer and Food Managing Director of M&S and Tim Steiner and Duncan Tatton-Brown, respectively Chief Executive Officer and Chief Financial Officer of Ocado. M&S has appointed Tim Steiner as Chair of Ocado Retail Ltd. Lawrence Hene, currently the interim managing director of Ocado Retail Limited, will be appointed as deputy CEO for a transitional period before he moves back into a senior role within the Ocado group.
“I have always believed that M&S Food could and should be online. The addition of Ocado to our family of businesses marks M&S’s first truly transformational step in shaping our future as a digital first retailer,” said Steve Rowe, CEO, M&S. “Through its unique technology, Ocado has developed the most cost advantaged model in online grocery retail and our new partnership unlocks growth for M&S Food through an immediately profitable, scalable presence in the UK’s fastest growing grocery sales channel.
“I am absolutely delighted that our JV will be led by Melanie. She is a real talent; who combines extensive retail knowledge, strategic vision and a focus on delivery.”
“Ocado Retail’s future, as part of a joint venture with M&S, is full of opportunity. The new company will be able to offer customers even greater range, service, quality and value,” saidTim Steiner, Chief Executive Officer, Ocado. “Our collaboration will also allow us to grow the business faster, add more jobs, and create more value for all our stakeholders. We are very excited to be working together.
“I would like to take this opportunity to thank Lawrence for his incredible achievements with ocado.com since 2011, which he has been instrumental in growing to the business it is today and I look forward to continuing to work with him, both during his transitional role at Ocado Retail Limited and when he moves back to the Ocado Group. I am very excited about Ocado Retail Limited continuing to realise its fullest potential under Melanie’s leadership.”
Ocado Retail Ltd will continue to trade as Ocado.com and M&S products will be available on the platform from September 2020 at the latest, providing customers with access to the full M&S food range for the first time.
M&S expects Ocado Retail Ltd to generate c.£70m of synergies for M&S Food by the third-year following today’s completion. These will arise through a combination of increased buying scale, improved sourcing economies to M&S own label and branded goods and significant reduction in product trial and development costs.
Further information on Ocado Retail Ltd and full details of the transaction terms and rationale can be viewed here.