Ocado sales climb as customers add M&S lines to baskets

Ocado’s retail revenue increased 40% to £599m in its first quarter “reflecting strong demand for online grocery”, which has grown during the pandemic.

Ocado’s average order size was £147 in the 13 weeks to February 28, which Ocado said was down to “seasonal strength” over the festive period “and a temporary reversal of the trend towards normalised shopping behaviour in response to further national lockdown measures in the UK”.

M&S products typically accounted for at least 25% of the average basket and average orders per week advanced 2.5% to 329,000.

Ocado reported that “rates of sales and EBITDA growth in future quarters will reflect annualisation against periods of Covid-19-related lockdown” and the extent to which a normalised trading week returns, along with the timing of new distribution capacity. 

Ocado Retail chief executive Melanie Smith said: “Over the past year, large numbers of UK consumers have made a permanent shift to online grocery shopping.

“Ocado Retail is best placed to serve these customers as we continue to improve the customer experience through the joint venture with M&S, adding new products, offering greater value and maintaining high customer service levels. 

“Q2 2021 represents the one-year anniversary of the start of the Covid-19 pandemic, which accelerated the demand for online grocery. While this year’s quarterly sales figures will reflect the year-on-year comparisons with periods of full lockdown, we expect strong growth over the coming years as we continue to lead the charge in changing the UK grocery landscape for good.”

Ocado Group chief executive and Ocado Retail chair Tim Steiner said: “As we progress towards a new normal for grocery retail and the focus for the industry shifts from meeting unprecedented demand to winning in a large and growing online channel, the need for a fulfilment solution that both delights a more knowledgeable customer and enables profitable, sustainable growth has never been more critical.

“This is the solution that Ocado’s partners are now rolling out in many countries across the world. Ocado Retail is the most advanced in demonstrating the power of the solution. It has proven that the model consistently delivers the best online customer experience in grocery with leading economics.”

New fulfilment centre openings are expected to increase Ocado’s capacity by 40%. Ocado is also seeking ”a minimum” of 12 new micro sites, mostly in London, to enable the rollout of its one-hour Zoom delivery service.