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by Peter Franklin
Wednesday, 26
August 2020
Idea
07:00

Britain: A tale of two retail giants

This country must look to its Ocado future — and leave behind it's M&S past
by Peter Franklin

Can anyone stand-up to Amazon? The online retail giant was going great guns before the pandemic, but now it looks unstoppable.

Yet there is hope — a challenger that might just beat BezosCorp at its own game.


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Remarkably, it’s a British supermarket. Ocado doesn’t have any shops, but it does have state-of-the-art automated warehouses. One of these ‘customer fulfilment centres’ features in a report for The Economist

The anonymous author describes how hundreds of robots whizz around, assembling customer orders. It’s a truly remarkable feat of advanced engineering.

Right now, Ocado is a David to Amazon’s Goliath; but David has better technology. In any case, Ocado’s no pipsqueak. The growing company is already bigger than big names like Marks and Spencer:

Ocado is now valued at £5.7bn ($7.6bn), and venerable M&S at £5bn. M&S is on the brink of dropping out of the FTSE 100, and may even by replaced by Ocado. If it were, there could be no better symbol of the old economy making way for the new.
- The Economist

We’re not just talking retail here. Britain is full of institutions that command public affection and customer loyalty, but rely too much on their history and too little on reshaping the future. M&S is one example, others include the BBC, the civil service, the Church of England and, dare I say it, the NHS.

It’s not that they’ve gone to complete wrack-and-ruin. They still do some things very well. So well, in fact, that it’s allowed them to get away with the things they keep on doing badly. Just think of M&S food and M&S clothing — you wouldn’t eat the former if it tasted how the latter looks.

As a country, we can’t keep carrying the deadweight. Like M&S, with its store-closure programme, there’s a lot of downsizing coming our way. To save the best of the old, the worst has got to go — and thus we desperately need enterprises capable of building anew.

By this I don’t mean disrespect for tradition or novelty for its own sake. Indeed, lazy institutions can always conjure up novelty by disrespecting their own traditions. Pull down a statue, cancel Rule Britannia, job done.

Real innovation, however, is harder won. So when it happens we should celebrate it. That means making some room in hearts. Cherishing old institutions is all very well, but they too were new once.

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Martin Price
Martin Price
3 years ago

No mention of Tesco who in the last 6 months have trounced both Amazon and Ocado in the Grocery home delivery market. All done with old fashioned manual labour. Perhaps AI hasn’t won quite yet?

titan0
titan0
3 years ago
Reply to  Martin Price

They’ll never take the human part out, regardless of A.I..
Computers do not consume. And unless we all have a home robot able to answer the door and put the food away, even robotic delivery from self driving vehicles will require human interaction.
There again, without human interaction or involvement, why would ‘BigCorp©’ even bother?

Carole Sherwood
Carole Sherwood
3 years ago

Does Peter Franklin not know that M&S now has a contract with Ocado to sell its food? Seems like a shrewd move to me.

JR Stoker
JR Stoker
3 years ago

But a sign of its terminal decline that it did not originate the idea?

Jeremy Stone
Jeremy Stone
3 years ago

And bought half of Ocado’s grocery business last year, before the coronavirus changed the shape of the market, and the valuation of online distribution businesses. This won’t rescue M&S from the hopelessness of its clothing business, or from being over-invested in old-fashioned retail space, but it does seem like a way of growing the food business (and getting a decent share of the equity uplift in Ocado).

Fraser Bailey
Fraser Bailey
3 years ago

My sister worked for M&S for a while in the mid 1990s. She mentioned that they had been to lunch with ‘the management consultants’. I knew at that point that there must be something wrong with M&S.

rperkins
rperkins
3 years ago
Reply to  Fraser Bailey

Yes, I remember going into M&S in those days. The ‘assistants’, if you could find them, were in the corners talking together and looking miserable; the clothing was tat. The smell of rubbish management was recognisable as I was working for the Post Office at the time.

Fraser Bailey
Fraser Bailey
3 years ago

‘Britain is full of institutions that command public affection and customer loyalty, but rely too much on their history and too little on reshaping the future. M&S is one example, others include the BBC, the civil service, the Church of England and, dare I say it, the NHS.’

Affection and loyalty?! Most people have nothing but contempt for all these institutions.

Philip Burrell
Philip Burrell
3 years ago
Reply to  Fraser Bailey

Is that opinion based on a straw poll of Unherd commenters? That seems far more likely than reflecting the actual views of the UK as a whole, with the possible exception of the “civil service”.

Stephen Follows
Stephen Follows
3 years ago
Reply to  Fraser Bailey

He also seems not to have noticed that the C of E has actively spent lockdown trashing large amounts of its history.

John Champness
John Champness
3 years ago
Reply to  Fraser Bailey

‘Most people have nothing but contempt for all these institutions.’

Where are the data in support of this assertion?

Having recently joined Unherd, I’m appalled at the quality of discussion here.

Andrew D
Andrew D
3 years ago

M&S sandwiches are pants

Stephen Follows
Stephen Follows
3 years ago
Reply to  Andrew D

But are M&S pants also sandwiches?

Andrew D
Andrew D
3 years ago

Only when filled with caramelised carrot chutney

ralph bell
ralph bell
3 years ago
Reply to  Andrew D

Have you never had a Wensledale and cameralised carrot chutney sandwich, delicious.

Andrew Thompson
Andrew Thompson
3 years ago
Reply to  ralph bell

Nom Nom 🙂

Fraser Bailey
Fraser Bailey
3 years ago
Reply to  Andrew D

By all accounts M&S pants are pants these days. I wouldn’t know – I don’t think I have ever bought anything from M&S.

titan0
titan0
3 years ago

All well and good but all these nation sized businesses do is colonise their rivals in mergers and buyouts.
Set to be the world’s first trillionaire, Bezos will soon be like the guy in the movie card game who wins the pot, leaves his mates broke and then has no one left to beat, or anyone left with money to purchase his goods.
But why care when by then, death for him, is less than a decade away?

Jeremy Smith
Jeremy Smith
3 years ago

Ocado is all about hype.