Ocado sees 19.8% increase in retail business revenue

Online retailer’s half-year results show a significant increase in revenue for its retail business, with numbers reaching £1.2bn

Revenue for Ocado’s retail business grew by 19.8% in the first half of 2021, compared with the equivalent period in 2020. In the 26 weeks ending May 2021, the company’s retail revenue hit £1.2bn, an increase from £1.02bn a year earlier.

Tim Steiner, CEO at Ocado Group, said: “As we head towards a post-Covid-19 future, it is increasingly clear that the landscape for grocery worldwide has changed, for good.”

Customer behaviour was already shifting online before the pandemic – it is expected that more than half of customers will shop for food online by 2021 – but the coronavirus pandemic increasingly forced people online as lockdown restrictions prevented them from carrying out day-to-day tasks elsewhere.

For some, including Ocado, providing customers with an online service during a time when people were forced to stay at home proved beneficial for business.

When the UK went into its first lockdown in March 2020, Ocado saw such a huge spike in orders that it was forced to pull its website, and chose to boost its technology workforce by 300 in the first half of 2020 to cope with increased demand.

As lockdowns continued into late 2020, Ocado saw an increase in weekly online orders as more people chose to shop online.

The latter half of last year also saw M&S and Ocado enter the first week of their online delivery partnership, allowing customers to order M&S food through the Ocado platform as part of a £750m deal.

But as restrictions begin to ease, Ocado said there was a slight drop in basket sizes in the second quarter of 2021, which it attributes to fewer meals being eaten at home as things slowly return to normal.

Due to this drop in basket sizes in the second quarter, with the number of items sold in a single purchase moving “toward pre-Covid-19 levels”, the retailer said basket sizes at the end of the 26-week period to 30 May were 10% lower than the average basket size across the first half of 2021.

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There is currently a lot of debate surrounding whether consumer behaviour shifts resulting from the pandemic will return to “normal” or whether an increased level of online shopping will continue.

Ocado has gone all-in on ensuring increased capacity for delivery across the UK to prepare for strong demand for online grocery shopping from customers who are “now socialised” into digital shopping habits as a result of the pandemic.

This includes making its fulfilment centres more efficient, partly through introducing more reliable bots, such as its 500 Series bot, which is now in operation at its Bristol fulfilment centre, and the development of more fulfilment centres in the UK in the near future.

On the technology side of the business, Ocado has continued to sign partners for its Ocado Smart Platform, which enables its partners to use a combination of Ocado’s software and physical fulfilment centres to provide online grocery services.

The company has always had a reputation for putting technology at the forefront of its decisions, and has spent the past five years researching the development of robotic technology. Earlier this year, it made a £10m investment in Oxbotica, an autonomous vehicle developer.

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