Ocado's Success Continues with Strong Performance in the First Quarter

Ocado

Recent data indicates that Ocado has emerged as the fastest-growing supermarket in the UK during the initial months of the year. This growth can be attributed to the company's effective strategy of prioritizing value, refining its product offerings, and enhancing its customer targeting efforts.

Ocado saw a 9.5% increase in sales in the 12 weeks leading up to 17 March, as reported by Kantar. This growth outpaced the overall online market, which saw a 6.6% rise.

Furthermore, Ocado was one of the few grocers, alongside Waitrose, that saw an increase in the number of shoppers in the last three months.

Ocado's first quarter results, released today, reveal that the company increased its active customer base by 6.4% to 1.02 million.

The online retailer, operated as a partnership between Ocado Group and Marks & Spencer, experienced an 8.1% growth in volume sales compared to the previous year, reaching £654.3m in retail revenue, a 10.6% increase.

Ocado experienced growth in average orders per week by 8.4% and an increase in average basket value by 2.1% compared to the previous year.

Nielsen figures, shared by Ocado, show that the company's market share increased by 0.7% from the previous year, reaching 13.5% by the end of February.

Hannah Gibson, the CEO of Ocado Retail, is pleased to announce that the company has had a great start to the year, building on the momentum from 2023. She attributes this success to the brand's marketing strategies, which have led to a 9% increase in repeat customers - those who have shopped at Ocado at least five times in the past year.

Gibson also mentions that Ocado has continued to enhance its customer experience by focusing on providing unbeatable choices, top-notch service, and great value. She says that the company has taken further steps to improve its offerings in these areas.

She mentions that the company has expanded its product range by introducing more core M&S grocery items and launching Makers Market to feature small brands. Additionally, efforts have been made to improve delivery options, product availability, and reduce the prices of 1,700 more products while expanding their own line.

She expresses that their strategy is connecting with customers and seeing positive growth in sales. However, she believes there is still room for improvement and more opportunities to explore.

Supermarket Growth

Ocado has been identified as the fastest-growing supermarket based on Kantar's data. Their sales increased by 9.5%, bringing their market share to 1.9%. Following closely behind is Lidl, with an 8.8% increase in sales, resulting in a market share of 7.8%.

Aldi saw a slower growth in sales, increasing by 3.1% over the period, compared to Tesco (5.8%), Sainsbury’s (6.7%), and Morrisons (3.6%) which all grew at a faster rate.

According to the latest data from Kantar, grocery price inflation decreased to 4.5%, marking its lowest level since February 2022.

In the four weeks leading up to 17 March, take-home grocery sales saw a 4.6% increase. During this period, sales of branded goods surpassed own label products. Notably, premium own-brand ranges experienced a significant sales growth of 16.1%, the fastest rate in three years.

According to Kantar's head of retail and consumer insight, Fraser McKevitt, grocery inflation has significantly decreased from a peak of 17% in March 2023. Despite this improvement, many British households are still feeling financial pressure.

Almost a quarter of consumers (23%) identified themselves as struggling financially, according to Kantar data – the same proportion as reported in November last year.

Editor's P/S:

Ocado's remarkable growth is a testament to their customer-centric approach and effective strategies. Their focus on value, product refinement, and targeted marketing has enabled them to outpace their competitors and capture a significant market share. The company's commitment to enhancing customer experience through expanded product offerings, improved delivery options, and competitive pricing is evident in their growing customer base and repeat purchases.

While Ocado's success is impressive, it's important to note that the supermarket sector remains highly competitive. The recent slowdown in sales growth for Aldi and Morrisons suggests that Ocado may face challenges in sustaining its current momentum. However, the company's strong financial performance and continued investment in innovation position them well to maintain their position as a leading online retailer.