Online shopping is here to stay says Ocado boss
OcadO raked in half-year sales of £1bn for the first time ever as founder Tim Steiner declared ‘the world has changed’.
The coronavirus pandemic has pushed millions of families online to get their groceries, with uptake strongest amongst the over-65s.
The group reported a 27pc jump in retail revenues to £1bn due to ‘unprecedented’ demand during the six months to May 31.
This helped retail profits jump 87pc to £45.7m, once extra costs from staff bonuses, testing and PPE were taken into account.
Steiner, who founded the firm 20 years ago, said: ‘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.’
He added he was confident this would lead to a ‘permanent redrawing of the landscape of the grocery industry worldwide’.
The group still made a loss as it ramped up investment in high-tech robotic warehouses for supermarkets abroad.
But the loss narrowed from £147.4m to £40.6m.
It also opened its first robotic distribution warehouses for casino in Paris and Toronto.
during lockdown the proportion of groceries sold online has increased from 7pc to 14pc, and Steiner predicted it would double again in the next few years.
Monthly online sales rose sixfold in the UK in august, compared to the same month last year, and doubled in china, according to Ocado.
The rapid change across the globe has turbo-charged its share price and boosted Steiner’s wealth.
Although its shares fell 2.2pc to 1988.4p yesterday, they have gained 87pc since the end of February. Steiner’s holdings are now worth £538m.
The group raised more than £1bn last month issuing equities and bonds to support its growth. That will also be used to help sign up new partners to use its technology and to invest in innovation at a faster pace.
Retail expert James Grzinic, at Jefferies, said: ‘Ocado’s firsthalf results show the benefits from the surge in online demand brought about by Covid-19, albeit one temporarily enabled by consumers’ willingness to take very large deliveries in unusual slot times.’
In the hour that Boris Johnson announced lockdown back in March, Ocado had as many visitors to its website as in the previous quarter.
The company now has 1m customers on its waiting list ready for when it can build more warehouses and boost demand even further
It is hiring 500 technology staff in the UK, and increasing capacity for domestic shoppers by 40pc next year with three new warehouses.
The FTSE 100 firm has suggested that as the online grocery market expands, traditional supermarkets such as Tesco and Sainsbury’s will be unable to compete with its robotic version.
at the moment they use workers to gather goods for deliveries by walking around the store, placing a limit on the number of orders that can physically be picked.