Mel Smith

Source: Ocado

Was Ocado Retail CEO Melanie Smith pushed, or did she jump? The timing was uncanny. The day before a very unflattering performance from the M&S retail joint venture was announced at the Ocado plc interims it looked for all the world like Ocado was signalling it was time for a new (presumably digital) broom.

Not that Ocado CEO Tim Steiner was going to acknowledge this. The original plan for Smith’s tenure was five years, he explained to us this week. “But the two years we had in the middle, the Covid years, running a grocery retail business during that time, were like dog years. It was absolutely gruelling. So Mel and I have discussed for a while how long she stayed, and we all agreed it was the right time for a handover and for somebody new to come in.”

Steiner certainly has a lot to be grateful for. Not only was Smith the architect of the original deal as strategy director at M&S. She’s delivered on it, successfully switching supply from Waitrose to M&S; trebling the size of the buying team to scale up Ocado’s branded buying capabilities (while improving its gross margin); launching a new brand identity and national TV ad campaign; opening three new CFC sites and rolling out Zoom. And she’s led from the front to support customers and inspire colleagues through the pandemic.

On the other hand, the suddenness of the handover (Smith leaves at the end of August) points to potential friction.

“Obviously the business is rebalancing itself due to the market conditions we have,” Steiner continued, “but it has an exciting future”. With so much capacity coming on stream, it’s going to take time, despite customer acquisitions being up 12%. The issue is basket sizes: down from £138 to £120. Smith really can’t take the rap for that. Not with the lockdown unwinding.

There are others levers out of Smith’s control too. Ocado is focused on developing scalable solutions for its customers. The personal investment needs is now secondary. Like the webshop. As amazing as the back end is, the front end is 20 years old. But, apart from a lick of grape-coloured paint, that doesn’t appear to be a priority.