Online grocery retailer Ocado Retail has released its figures for the 26 weeks ending 2 June 2024, marking impressive growth despite food inflation easing in the UK market.
The retailer recorded an 11.3% increase in revenue during the period and achieved a positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of £20.7m, driving its share price up by 17%.
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Leading data and analytics company GlobalData forecast 3.6% growth in the UK food and grocery online market for the first half of 2024 (H1 2024), which Ocado has exceeded, suggesting that the grocer has gained market share.
GlobalData senior retail analyst Eleanor Simpson-Gould explained that for Ocado “this first half of strong double-digit growth will be a welcome relief in pressure to strengthen its relationship with partner Marks & Spencer and revitalise its struggling image.”
In H1 2024, Ocado has made progress on its Perfect Execution Plan which includes a price promise extended to 2,800 products.
Simpson-Gould states that “this strategy is yielding results, as active customer numbers surpassed one million this half, marking an increase of 8.1% versus 2023. Significantly, Ocado’s ‘mature’ customers – those who have shopped more than five times with the retailer – have risen 9.7% year-on-year.
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By GlobalData“These figures indicate that Ocado is not only attracting new customers but also fostering loyalty and encouraging repeat business from its existing clientele, a crucial metric after a year in which transient consumers shifted to discounters.”
Despite improved revenue and customer acquisition, Ocado’s average basket value has not achieved the same robust growth as its other key performance indicators, increasing by a modest £2.14 to £123.36 compared to 2023’s figure of £121.22.
Though Ocado’s selling price increased 1.5%, Simpson-Gould suggests that Ocado customers are cautious in their spending and that more work needs to be done to convert shoppers into higher price points.
“Ocado must strike a balance of improving value perception without diluting its premium range and focus on driving volume growth. The launch of new products and targeted promotional discounts will be crucial.”
The retailer has cautioned investors that it anticipates subdued revenue growth in FY24, influenced by a deceleration in average selling price growth as food price inflation stabilises.
In April 2024, Ocado experienced difficulties after a proposed bonus plan for co-founder and chief executive Tim Steiner sparked investor discontent at the company’s annual general meeting.
