Grey will take on the advertising business as well as the digital account formerly handled by AKQA. The integrated review followed marketing chief Patrick Bousquet-Chavanne taking on responsibility for M&S.com in May this year.
It is understood that the other pitching agencies – VCCP, CHI & Partners and Rainey Kelly Campbell Roalfe/Y&R – were told they had not been successful this morning. The review was only open to agencies in which WPP has a stake following intervention from chief executive Sir Martin Sorrell.
The account has been plagued by rumours since Bousquet-Chavanne replaced M&S’ long-serving marketer Steven Sharp in 2013, fed by the retailer soliciting creative ideas from other agencies.
Bousquet-Chavanne, whose full title is executive director of customer, marketing and M&S.com, said: "Putting our customers at the heart of everything we do is central to every decision we make as a business.
"Following the competitive pitch process we’re delighted to announce we’re working with Grey as our fully integrated agency. Grey will help us engage with customers across all our channels – in-store, digital and mobile and our members club – Sparks."
The retailer asked a rival agency – thought to be Engine – for ideas for last year's M&S Christmas campaign (below) but did not use them. In April 2015, Rainey Kelly Campbell Roalfe/Y&R's parent WPP commissioned ideas from its other London creative agencies, including Grey, for the same Christmas campaign.
M&S is Grey's first major win since the shock announcement that its chairman Nils Leonard, chief executive Lucy Jameson and managing director Natalie Graeme would be leaving the agency to launch a start-up.
Grey promoted chief strategy officer Leo Rayman to chief executive ahead of the trio's departure in June. Rayman has since elevated Wayne Brown to chief operating officer and appointed Matt Tanter to replace himself as chief strategy officer.
Rayman said: "This is a defining moment in the Grey London story. We’ve been after a marquee retailer for a number of years, and they don’t come more famed, more loved and bursting with opportunity than M&S.
"We’ve championed integration across our clients for a long time but in many ways this win is the zenith of it. To bring advertising and digital together under one roof for one of the biggest retailers in the country sets a new benchmark, not just for us but for the industry.
"That they’ve fully bought into the new team here, and more importantly what we’re trying to achieve, is a real show of faith. We couldn’t be happier, and I can’t think of a better partner with whom to start what is an exciting new chapter for the both of us."
Jon Sharpe, who took over from Ben Kay as chief executive of RKCR/Y&R in December last year, said: "We're sad to see the end of our 16-year creative partnership with M&S. Together, we undeniably built one of Britain’s most loved and iconic brands and consistently we created award-winning work that has redefined retail advertising.
"Having welcomed new talent and many great new clients through our doors this past year including TUI, Chanel and Premier League, we're looking forward to moving onwards and upwards. We wish M&S every success in future."
M&S appointed RKCR/Y&R to its ad business in 2000 following a review involving BMP DDB (now, after a number of changes, Adam & Eve/DDB). Although RKCR/Y&R was inexperienced in retail at the time, the shop went on to transform the grocery market with its "food porn" ads.
RKCR/Y&R was M&S’ first retained agency working on its overall branding. Bartle Bogle Hegarty had created a Christmas campaign for its food division and BMP4 (part of the DDB group) handled the rest of the account.