Marks & Spencer has written to food suppliers asking them to help lower prices and drive volumes as it prepares to launch a joint venture with grocery tech giant Ocado.
Marks & Spencer food managing director Stuart Machin said in a letter seen by Retail Week that the deal – which comes into effect next year – would be “transformational” but that supplier buy-in would be crucial.
He also said M&S will make more of its full range available to shoppers through bigger foodhalls.
He wrote of the Ocado tie-up: “It’s a brilliant deal for customers, our supplier partners and M&S. To our mutual benefit, we need to improve efficiencies, drive volume and deliver growth. We cannot do this without the full support and backing of our supplier partners.
“Like our joint venture with Ocado, we need true partnerships with both sides contributing and both sides benefiting. Now is the time for you to play your part in the transformation of M&S Food.”
Machin said: “We must continue to lower prices and drive volume and, most importantly, we must maintain our heritage of delivering amazing, high-quality food.
“I want us to go harder and faster on innovation, but it must always be underpinned by M&S Food quality. If we stay true to this, we will all be better placed to benefit when our products are available online.
“We must also continue our work on being lower cost to serve for you, our supplier partners, so that we can both operate more efficiently. You are already playing your part, and I thank you for your ongoing support and hard work.”
Enhanced food halls
He maintained that suppliers would benefit from the Ocado partnership, which will at last establish M&S in the online grocery market, and allow the retailer to make the most of its offer.
Machin wrote: “We have over 6,500 lines of delicious, market-leading products; we just don’t get them in front of enough customers. Our full range is only available in a dozen or so stores. This must change, and it will.
“The full range will go online with Ocado and we are starting a store renewal programme that will get more products in front of more customers with bigger, better M&S Food Halls in new and existing sites.”
He corrected the “misunderstanding” that M&S food is expensive and said: “We have been heavily investing in price since I joined the business. Price deflation in an inflationary market gives us an edge on price that we haven’t had before. We constantly measure ourselves and know that, including promotions, we are 2-3% cheaper than Waitrose.
“But we can be even more competitive by providing outstanding quality, innovation and truly better value.”
“M&S Food is changing – fast,” he said. “I believe that going online is the most exciting move we have ever made. Underpinned by our far-reaching plans to protect the magic of M&S Food and modernise the rest of our business, this is the moment we have all been waiting for to drive significant growth in our businesses. “