Ocado ‘in talks with M&S’ over delivery deal

Grocery delivery firm Ocado is reportedly in talks with Marks & Spencer about a potential deal which could signal the end for Ocado’s longstanding partnership with Waitrose.

According to a report in the Mail on Sunday, the talks with M&S, which has yet to set up a dedicated online grocery delivery operation, could involve the purchase of Ocado’s automated distribution centres, delivery vans and lorries.

The reports come ahead of the end of the current Waitrose-Ocado supply deal, which is due for review in September 2020, following a two-decades-long partnership.

Ocado had been Waitrose’s main online groceries supplier and delivery network, but Waitrose has been building up its own Waitrose.com service from its own warehouses as it competes with rival retailers to keep up with growing demand for online shopping options.

The development of a fully-fledged grocery delivery service is reportedly part of M&S chairman Archie Norman’s plans to use its strong food business to turn around the company’s fortunes, as clothing and homeware sales fall.

The retailer saw a drop of 1.2 per cent in like-for-like food sales over the Christmas period, compared to an overall fall in sales of 3.9 per cent, amid a backdrop of turbulence for the UK High Street.

Earlier this month M&S revealed plans to close a further 17 stores by 2022 as part of its overall commitment to shutter 100 stores and undergo digital transformation as consumer spending shifts online.

Ocado’s partnership with Waitrose, signed in 2010, gives Ocado permission to sell Waitrose goods and use its branding on its website and delivery vans.

It is not clear whether under the current terms of the deal it would be possible for Ocado to maintain delivery and logistics partnerships with both Waitrose and M&S at the same time.

In a separate deal,Ocado has been running the technology and delivery operations for Morrison's online grocery service since its launch in 2014.

A spokeswoman for M&S said the company does not comment on anything that is rumour or speculation. A spokesman for Waitrose said the company does not comment on speculative stories.

Ocado decline to comment.

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