The Ocado and Marks & Spencer tie-up is part of a growing ‘power partnerships’ trend

Whilst still in its infancy, the online grocery market is experiencing tremendous growth. The UK is by far the largest online grocery market in Europe and can consider itself a significant global player, too, leading both the US and China in online grocery share of retail.

The driving force of this growth is of course the evolution of shopper behaviour. Key factors have included the growing demand for a highly convenient purchase experience, access to a wider and more varied product portfolio and the fact that digitally native millennials are now managing households.

As a result of all these headwinds, food retailers are under increasing pressure to evolve and remain relevant. However, diversifying into online grocery provision presents huge challenges and requires very deep pockets. Delivering fresh, frozen and perishable products to a consumer’s home is an expensive undertaking. It is the need to execute this ‘last mile’ effectively and efficiently that has, in part, led to the confirmed power partnership between Ocado and Marks & Spencer.

For Ocado, M&S represents something of a coup as it’s a well-known, highly regarded and reputable British brand with its grocery arm showing high levels of consumer engagement and loyalty. Meanwhile, it’s no secret that M&S, like many others, has been struggling to weather the ongoing retail storm. Its food and grocery proposition is one of its most strategic and lucrative channels, but has failed to successfully launch into the eCommerce landscape. Tech-savvy Ocado offers M&S the relevant eCommerce platform, logistics and convenience-led approach required to become a key player in the online grocery market almost overnight. What occurs is a mutually beneficial, symbiotic and reciprocal partnership, and one which delivers against the needs of consumers in today’s retail environment.

We see these types of powerful and lucrative affiliations across a number of other categories, where they are often used to bolster power against an impending competitor. Gillette partnered with Walmart to leverage its subscription capabilities in an effort to thwart the growth of Dollar Shave Club. More recently, we’ve seen the announcement of a collaboration between the BBC and ITV, in order to compete with content streaming giant, Netflix.

Businesses of many types need to focus their efforts on futureproofing against the elephant in the room – Amazon. Along with significant ambition in the fashion world –something Amazon has seen mounting success with in the US over the last 12 months – the eCommerce giant has huge ambitions in the food and grocery category; having bought Whole Foods for a mere $13 billion. With several eCommerce platforms already dedicated to the category and the recent news they plan to open grocery stores in the US, Amazon will undoubtedly become a significant and dominant player in the online grocery world, posing a serious threat to current traditional retailers.

The Ocado and M&S deal is not the last we’re going to see of power partnerships, as other brands endeavour to scale and compete in this changing landscape. Whilst most grocery shopping is still done in store the rate of change is phenomenal and no traditional retailer can afford to ignore this. Things change fast in the worlds of digital and ecommerce and those brands which fail to be nimble, simply fail to exist. The ‘two heads are better than one’ approach therefore looks increasingly viable for traditional businesses seeking to scale up and modernise, so let’s watch this space.

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