A tie-up with Ocado could signal a long overdue step into food delivery for M&S

If 2018 was the year of profit warnings for retailers, 2019 looks set to be the year of closures. Last week it was the turn of Paperchase to be reportedly mulling a possible sale and store closures, joining the likes of HMV and French Connection in search for a rescue bidder.

It is within such a gloomy context, therefore, that we come to M&S (yet again). Blighted by long leases and store costs, the high street giant has focused all of its attention on cutting its portfolio in the last year. But its plans to shut 100 stores are only one side of the story, and now the City is awash with rumours that M&S could finally be coming to terms with its online troubles too, specifically by doing a deal with Ocado to expand its base of digital shoppers.

Given the history of Ocado’s chairman Stuart Rose as one of the most prominent M&S figures of recent years, links between the two firms remain strong. And with M&S recently parachuting in Stuart Machin to stop the rot in food sales, a different approach is firmly on the cards.

According to analysts there are two routes into the tie-up, but questions loom large over both of them. Firstly, if Ocado is to take over the M&S website in the same way that it has done for Morrisons, then it faces the challenge of basket sizes. Unlike Morrisons, the success of M&S food lies in its small meals for couples and special occasions, which do not tend to chime well with the economics of a large online food delivery model where people order a whole week’s worth of groceries.

To the second route, then. If M&S food is to be carried by Ocado it might work better economically but it raises questions over whether Ocado can have two premium partners, given it is already tied to Waitrose. However, Waitrose’s contract with Ocado runs until 2020, which would give weight to reports in the Mail on Sunday that the deal on the table would see M&S fill a vacuum left by Waitrose.

Despite both sides keeping shtum for the time being, one thing is for certain: While the high street chain might not have any God-given right to exist, as its chairman Archie Norman decried last summer, tie-up talks with Ocado would show that M&S is deeply serious in its fight to survive.