Gousto founder and chief executive Timo Boldt is putting his faith in automation and the subscription box retailer’s proprietary artificial intelligence to keep prices low for customers.
Boldt told Retail Week that the current hyper-inflationary environment was making trading “more challenging to navigate” but pointed to Gousto’s technology and logistics teams as his secret weapons to keep prices low.
“It’s no secret that Covid caused a lot of supply chain dysfunction, and Putin’s war is only exacerbating the issue. We’re seeing huge spikes in wheat and beef prices in the UK and across the world.
“But we have the best people you can have [in our logistics team] and I’m hugely proud of what they’re achieving. And then the ability to trade the menu from a technology perspective allows you to be 50% more agile than any supermarket could ever be.”
Boldt said Gousto’s technology allows the subscription box service to be more flexible with its menus by dynamically changing to fill gaps in product availability without affecting the service for customers.
Gousto is set to open a new, fully automated production facility in Warrington this summer. Boldt said the cost of operating this factory will be “double-digit lower” than earlier production plants, which again will help Gousto absorb “a certain amount of inflation”.
He said this combination will allow Gousto to “soften the blows and protect the price point”, adding: “we’re truly mass market, offering products from £3.14 plus free delivery across the UK. If we can weather the storm and allow families to get great value and protect our prices from inflation, then we’ll become more competitive and even more attractive versus the supermarkets.”
“The world of you and I pushing trolleys in a crowded supermarket, queuing for a long time and wasting 40% of the food, just feels really outdated to me”
Timo Boldt, Gousto
Gousto has delivered its second straight year of profitability, with underlying EBITDA growing 10% to £20m. While Boldt said profitability is “fantastic”, the main focus of the business remains growth.
When asked if he would sacrifice profitability to keep prices low and customer retention high, he said: “I don’t think it’s one or the other, given how fast we’re innovating. But directionally, I would agree with that statement.”
While the latest Kantar data showed a third consecutive month of falling online grocery sales, Boldt is convinced ecommerce food retailing will represent 20% of the market by 2025.
“I’m super-optimistic about online. I think online will grow to 50% [of the market] globally. The only question is when? The world of you and I pushing trolleys in a crowded supermarket, queuing for a long time and wasting 40% of the food, just feels really outdated to me”.
Despite lockdowns unwinding across the UK during 2021, Gousto was able to deliver both profitability and an increase in sales.
The 2021 financial year was the ninth consecutive year of double-digit sales growth, up 67% year on year to a record £315m. The retailer sold 90 million meals in 2021, compared to 53 million in 2020.
Gousto also created 600 new jobs in the UK over the period, with 50% of its London team now in tech and data roles. The retailer employs 1,625 people across the business.
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