M&S could soon be forced to share online Ocado profits with landlords

Industry

Marks & Spencer could soon be forced to share some of its online profits made via Ocado with its landlord as a progressive new leasing model is brought in.

The new leasing model, developed by data analysts at CACI, will see retailers pay a lower base rate of rent which is then topped up depending on footfall, in-store sales, and online sales for the first time.

In October it was reported that some major landlords were considering implementing the new strategy, which would also factor in sales made via third party couriers like Deliveroo.

According to The Grocer, private equity investment fund Benson Elliot which owns a number of shopping centres across Europe and the UK is now planning to adopt CACI’s model.

This would see a number of M&S, Iceland and Boots stores situated within these shopping centres fall under the new rent model.

READ MORE: UK retailers’ rents could soon be based on online sales

According to CACI’s managing consultant Chris Lidington, M&S rent could be calculated partially based on the “online halo effect” of sales from Ocado.

Lidington added that this would mean looking at Ocado sales “within the store’s catchment area versus areas of the UK that don’t have access to an M&S food store, so we can see how the spend-per-head differs”.

Benson Elliot’s director of retail Jonathan Ratnage said: “Developing accurate methods to measure the wider store contribution is becoming more important as the purpose of stores evolves,” said Benson Elliot director of retail Jonathan Ratnage.

“CACI’s new leasing performance model creates a good opportunity to bridge that gap. Allowing the physical and digital world to come together through a collaborative strategic partnership will be a vital part of the development of our sector.”

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