Retail food and drink trends

Ocado: Shopping has changed for good

Article 2 min read


Bookmark this story

Shopping delivery company Ocado has said that it believes shopping has changed for good, and the end of the pandemic will not see a return to previous habits by shoppers who’ve become accustomed to the convenience of at-home delivery.

Ocado said in its full year statement: “The pandemic has accelerated the rate of channel shift to online.”

“Online grocery market share in the UK has nearly doubled over the last year to 14%, according to Kantar. Similar trends are observable in the United States as well as many other countries around the world.”

Ross Hindle, from research firm Third Bridge, told the BBC: “These are not just results, these are remarkable results. Ocado couldn’t have asked for better trading conditions.

“The M&S partnership has, so far, proved positive for Ocado, with management highlighting that access to M&S products is now higher than the benchmark Waitrose set.”

BBC Business Correspondent Dominic O’Connell echoed these comments, saying, “Ocado has been one of the best-performing shares in the FTSE 100 in the past year, roughly doubling in value since last March.

It is in the perfect position to benefit from the restrictions put in place to control the coronavirus, with shoppers clamouring for online deliveries in order to avoid a trip to the supermarket.

These results – for the 12 months to the end of November, so not including the most recent national lockdown in England – show grocery sales up 35% to £2.2bn.

You might have thought that jump in sales would have sent the shares up, but in fact they were down – 4% – in early trading.

Investors have looked past the headline sales number to see another pre-tax loss for the year – £44m. That is not so surprising in itself, but shareholders would also have noted the projected increase in capital spending, which will rise to £700m in the coming year.

Ocado is spending heavily not only on technology, but also new warehouses. Shares in Ocado have always priced in the promise of future profits, and today’s numbers made that promise seem that much further off.”

Related articles:

How creating consumer experiences can help your brand
The challenges, and opportunities, facing seafood alternative producers
Unilever expanding its range of plant-based foods to meet growth and demand