Covid-19: Online demand sees Ocado retail sales increase 27%

Ocado has posted a 27% increase in retail revenue for the six months ending 31 May 2020, reflecting the UK’s period of lockdown to contain the spread of coronavirus.

The business said it was able to meet the unprecedented demand for online groceries, a trend it believes will continue as the UK begins to emerge from its state of lockdown.

“The world as we know it has changed. As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months; and we won't be going back,” said CEO of Ocado Group, Tim Steiner. Indeed, order volumes were up by around 60% in London’s Erith fulfilment centre, which back in January introduced three robotic pick arms to increase picking capacity.

“We are confident that accelerated growth in the online channel will continue, leading to a permanent redrawing of the landscape of the grocery industry worldwide. This will mean more demand for Ocado Smart Platform from current and prospective partners and our recent fundraising will ensure that we are able to meet that demand. It will also mean that we can invest more capital in innovation for our partners and further expand our leadership as the world's preeminent solutions provider in online grocery.”

The technology company also pointed to a 58% increase in fees for its third-party grocery platform, as international roll out continues, with the opening of the first customer fulfilment centres for Groupe Casino in Paris, and Sobeys in Toronto completed over the period.

While revenues remained high, group EBITDA dropped 36% to £19.8 million, due to increased investment in its international solutions business. Loss before tax hit £40.6 million.

Steiner added: “Seizing the future will, of course, require the same mix of constant questioning and innovation, focus, and quiet determination that has brought us so far. I have no doubt that we will rise to the challenge, taking advantage of a scale of opportunity that we have never seen before.”

Over the last six months, Ocado hired 300 people to work on technology to meet the increased demand of UK shoppers and worldwide partners.

Ocado also said the preparations for the September switchover from Waitrose to M&S products are in the final stages. This new joint venture to add over 5,000 M&S Food lines, compared to around 4,000 Waitrose products currently available. Ocado will also stock around 1,600 core M&S clothing and home lines per year, compared to 250 Waitrose lines.