Retailers must buy into joint ventures

In response to the news that M&S and Ocado are entering a joint venture to "transform online grocery shopping in the UK", Perran Jervis comments on why retailers will need to embrace partnerships and share more resources - including tech - to keep pace with the changing retail environment. 

Marks & Spencer simultaneously closing stores while making such a significant investment in technology shows not just the importance of retailers being online and able to provide home delivery, but also of harnessing the right technology to keep pace with the way the retail environment is changing. 

Marks & Spencer has never had an online food business, so entering a joint venture with Ocado – which is known for its state of the art technology – is a significant move. Marks & Spencer can bring the product, Ocado can bring the infrastructure and together they can share the cost and rewards of this new venture. 

This is going to become a lot more familiar as more retailers start to realise that the only way they can evolve is through shared resources, including technology, space and logistics. Traditional warehousing, delivery networks and store formats are no longer sustainable and Marks & Spencer itself has demonstrated this, for example in teaming up with WHSmith in travel locations under the Food to Go format. 

Even if a retailer has a good online business, technology is so important and is changing so rapidly across every part of the supply chain that joint ventures with the right partners will enable them to tap into cutting edge technology and keep ahead without the time delay and capital expense of in-house development.

Waitrose has developed its own home delivery service under waitrose.com using part of its existing infrastructure in filling orders from stores and a dedicated fulfilment centre in direct competition with Ocado – so it is not surprising that Ocado is looking for other partners to obtain a return on its own huge investment in supply chain technology.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.