Marks & Spencer is drawing up a plan to boost Ocado supplies

Marks & Spencer chief executive Stuart Machin plans to boost his food delivery operation Ocado as part of a sharply escalating battle against rival grocers.

Machin is launching a comprehensive review to improve service, make the business more efficient and drive growth.

The overhaul is part of a wider strategy to increase M&S’s share of UK food spending in stores and online by more than 25 per cent. Hannah Gibson, Ocado Retail’s new business boss, is already leading a review just a month after her arrival.

It is understood it will draw up a plan to put more of M&S’s range on the Ocado website to compete with the likes of Waitrose and Sainsbury’s. Currently, 75 per cent of the food range is offered through Ocado. Management wants to increase this closer to 100 percent in the coming months.

Bosses are particularly keen to get more products from the ‘Remarksable’ price range on Ocado as soon as possible to appeal to budget-conscious shoppers amid a cost-of-living crisis. Gibson is also looking at how to improve “substitutes” – alternative products delivered to customers when the products they want are out of stock.

Sales of M&S products since the launch of the joint venture with Ocado just over two years ago have reached £1.3 billion. Machin recently told investors that the possibilities for the service are “not yet fully disclosed.”

One insider said he plans to grow Ocado Retail over the next five years to achieve “national market leadership in online food retail and a brilliant showcase for the M&S brand and range”.

Ocado has struggled to keep up with customer demand during the pandemic because it operates from distribution centers and warehouses and cannot open new ones fast enough to meet the surge in online orders. Competitors such as Sainsbury’s and Tesco pick products from store shelves for online delivery, so have been able to respond more quickly.

M&S is expected to benefit from Ocado’s new distribution centres, including those in Bicester, Oxfordshire, and Luton, Bedfordshire. It is aiming for 700,000 orders a week, compared with 367,000 at the end of the last financial year in March. The review comes as the industry comes under pressure from rising electricity bills, rising food prices and rising staff costs.

There are signs that customers are buying less and reducing the amount of food they throw away to save money.