Ocado chief executive Tim Steiner today said he was confident that the online grocer’s commitment to innovation, supported by its own in-house developed technology, meant it would continue to grow in a competitive market.
Speaking as the retailer announced a double digit rise in sales in a trading statement, Steiner said the market was “very competitive” with “sustained and continuing margin pressure”. “There is nothing to suggest this will change in the short term,” he said. “However, Ocado’s combination of choice, competitive pricing and industry-leading service has contributed to an increase in average orders by nearly 19%, our best volume performance in more than five years.”
Ocado reported group sales of £314.0m in the 12 weeks to August 7, 15.4% up on the same time last year. This includes income from its partnership with Morrisons that sees it supply both fulfilment and technology services that underpin Morrisons.com. Meanwhile, retail sales of £286.4m, 13.6% up on last time, reflect results from Ocado.com, Fetch.co.uk, Sizzle.co.uk and Fabled.com. Fabled.com, its retail partnership with Marie Claire magazine, launched online and opened its first store this summer. The venture specialises in premium health and beauty products.
An average of 226,000 orders were placed each week with Ocado.com during the period, 18.9% up on last time. But average order values of £107.94 were 3.4% down on the £111.75 recorded last year, reflecting continued price cutting in the grocery sector. When Fetch, Sizzle and Fabled orders were taken into account, the total average basket fell by 4.5% to £105.57.
Steiner remained upbeat for Ocado’s prospects in the sector. “We are confident that our commitment to further improving the customer experience through constant innovation, supported by our world-class proprietary technology, will allow us to continue to grow ahead of the online grocery market and substantially ahead of the market overall,” he said.
He added: “Ocado has shown, once again, strong steady growth as more customers across the country entrust us with their regular grocery shop.”
Catherine Shuttleworth, CEO at Savvy, said: “Very positive news from Ocado this morning, demonstrating more and more shoppers are happy to move to an online-only proposition. Whilst we’re seeing the competition in this marketplace heat up, Ocado’s range authority, quality credentials and subscription payment model – including delivery to tie in customers – are paying off. Additionally its smart approach to continued service enhancement and improvements in product mix confirm the retailer’s position a real force to be reckoned with. With Amazon at the early stages of trying to ramp up its online food offering, and with grand ambitions for expansion across the UK, no doubt it will be looking at Ocado with great interest today.”
