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M&S and the prominence of online grocery retail

Last month, Marks & Spencer ("M&S") announced that it intends to launch a soft pilot of online food retail, potentially in partnership with Ocado. M&S currently operates only a limited online food retail offering, covering items such as party food and wines. Whilst the retailer says that it has so far not seen its food retail business dented by its lack of online presence, it is presumably looking at retail trends and also the threat of new entrants such as Amazon Fresh. The M&S model should be an interesting case study for those of us involved with the retail sector and retail property, as M&S is looking at making collections from local stores, rather than using distribution hubs.

Together with the news that McDonalds is looking to introduce online deliveries in the London area, this is further evidence of retailers' faith in UK shoppers' and consumers' continuing appetite for online retail.

Whilst it must be remembered that in-store sales still dominate the grocery sector, the UK is already the third largest market place in the world for online grocery sales, after Japan and South Korea.

The United Kingdom is widely regarded as having the most developed grocery market in Europe. As evidence of this sophistication, we are seeing the relationship between online and in-store retailers become increasingly interlinked. As examples, Argos and eBay began their click and collect tie-up in 2013 and Morrisons has recently extended its collaboration with Amazon, through its 'Morrisons at Amazon' service. These sorts of developments mean that, as property lawyers, we now see the inclusion of "click and collect" wording and other references to online retail in retailers' leases as fairly common.

As with other similar announcements in recent years, the latest news from M&S does not signal a lack of commitment by retailers to bricks and mortar. The British retail heavyweight has also announced its intention to open 200 further food-only stores by 2019.

 

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