M&S is set to trial an online food delivery service this autumn as it sharpens the focus on its food business.
CEO Steve Rowe admitted the high-end retailer could no longer afford to ignore the growing online grocery market, estimated to be worth £17.6bn by 2021, in an internal meeting on Wednesday.
“We continue to review food online carefully,” Rowe said. “It has not cost us anything over the last five years by not being online with food. Our customers haven’t moved yet, but they will and we need to ensure we are ready with the right response.”
Rowe said there were “unanswered questions over what this means for M&S” and set out plans for a “soft trial” this autumn, according to The Guardian.
M&S has so far been one of the biggest food retailers operating in the UK to resist running a full online delivery service, alongside Aldi and Lidl.
Until now, it has only offered a limited selection of products online such as party food, wedding cakes and seasonal food platters.
The only way to get full M&S online delivery was to use a third party such as one-hour service Convibo, which only operates in the London area and charges a markup of 10% to 15% on products.
The trial comes after M&S set out its intention to concentrate further on its food business in November. The retailer will open more than 200 new Simply Food stores by the end of 2018/19, while closing 30 full-line shops and downsizing another 45 to food halls.
Shore Capital analyst Clive Black said online grocery delivery could appeal to the affluent customer base. “It makes sense for M&S to look at the channel but it has to be in the context of making a profit, not just making sales for sales’ sake,” he told The Grocer.
“M&S will undoubtedly have been losing some customers because they have an affluent customer base who will buy online. But the more important thing is whether they can do this profitably because the last mile is universally challenging for the main players.”
IGD estimates the online grocery market will grow by 68% between 2016 and 2021 to represent £17.6bn of sales.
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