Deliveroo founder Will Shue called the transition to the grocery store “a huge area of growth.” Photo: Jason Alden/Bloomberg
At the same time, last month, Ocado Retail — an online retailer that is a joint venture between the Ocado Group and M&S — reported that profits had plummeted in the six months to the end of May. falling from £31m a year earlier to £2.5m loss
M&S executives weren't shy about showing their frustration. Board chairman Archie Norman last month told investors he was “not happy” with the business, stressing that there was “necessary work” to improve its performance.
The concern was echoed by Ocado's Steiner, who said “disappointing” that the supermarket was not where the two partners wanted it to be.
The task of how to change the business fell to Hannah Gibson, who took over Ocado Retail last September with a long to-do list.
Gibson recognizes that same-day delivery is an area where she sees great room for improvement. This should come as no surprise given that Gibson was instrumental in the development of Ocado's Zoom quick delivery app.
, which took over Ocado Retail last September, was tasked with changing the business. Photo: Ocado
The online store currently offers same day delivery options to most locations across the UK, but availability is limited. up to several thousand every week.
Now we plan to expand Ocado's same-day experience by creating more slots for customers.
M&S insiders are keeping a close eye on them for fear that the economy of fast delivery still not justified.
To operate on the same day, says one M&S source, operators must either sell at premium prices or sell larger orders, with the race not so much for market share as it is to find the right operating model.
Deliveroo, for example, has failed to turn a profit in the 10 years since its launch. The company is now increasingly focusing on grocery delivery and has signed deals with Sainsbury's, Co-op and Waitrose.
The delivery app hailed the change in strategy as a success after outpacing Ocado in the number of weekly deliveries. .
Supermarkets' profits fall despite rising prices. Total Industry Operating Profit
It's no surprise that the grocer is urgently trying to make a difference, but profitability will be key.
It is expected to focus on getting shoppers to order larger deliveries for slots in same day, not just last minute ingredients that are usually sold on delivery apps.
Andy Adcock, veteran retailer and former managing director of food at M&S, says Ocado's same-day shift could see local convenience stores lose out.
But he doesn't count that this will affect M&S food halls as its customers are “very much anyway, a lot of same-day shoppers.”
“M&S has the best reach, relative to all retailers, in terms of tourist destinations” , says Adcock. “They also got the added bonus of having Ocado be the most efficient and fastest delivery operator in the UK.”
At the moment there are obvious problems with how to arrange same day delivery around the world. The UK, especially with higher fuel costs and price sensitivity among buyers.
But it looks like Gibson is putting things in order to make sure Okado is ahead of the pack in terms of the changes she sees are coming fast. .
The message from M&S was that Ocado has “needed work”. Gibson gets stuck.
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