Marks & Spencer’s landmark tie-up with Ocado will have “very limited” space for any new customers to purchase its goods online.
M&S chairman Archie Norman told investors during its virtual annual general meeting last week that its upcoming £750 million joint venture with the online giant will see swathes of customers struggle to place orders.
Norman said the spike in demand for Ocado during lockdown meant the company is continuing to operate “at capacity” and therefore will not be able to serve many new customers when the joint venture launches in September.
This is despite M&S announcing that they expect this tie-up, which will see its food sold online for the first time in its history, to double food sales.
“Ocado during the crisis has been in huge demand, because existing Ocado customers have been trying to increase their orders and additional people have been trying to get on to the delivery circuit,” Norman said.
“As a result, because they distribute out of these huge robotic warehouses they are right now operating at capacity, so we can’t say how much scope there will be for new M&S customers or shareholders. But it is likely to be very limited.”
Ocado has come under fire from customers during lockdown for its inability to meet demand for its services.
In April, Ocado told customers it was “sorry” that it was not able to provide grocery delivery to as many customers as it would like.
Mel Smith, the online grocer’s chief executive, told customers in a blog that she was aware customers were struggling to secure delivery slots while in lockdown.
“No matter how hard we work, we simply do not have the capacity right now to meet all the demand we are seeing from existing customers, let alone new ones,” she said.
Despite these issues Ocado has emerged from lockdown in a far better position than it went in, seeing sales jump 91 per cent over June to achieve its highest ever market share of 1.7 per cent.