Grocery startups to stay small, Ocado boss predicts

Rapid delivery firms will fail to take over the grocery market and inevitably lose out to bigger retailers, Ocado chief executive Tim Steiner has said.

He made the comments as the online supermarket’s six-month growth halved. 

The Covid-19 pandemic has seen startups like Weezy and Getir, which deliver groceries in around 15 minutes, attract a wave of investment.

However, Steiner claimed that traditional online shopping – where customers book delivery slots in advance – would continue to dominate.

READ MOREOcado mulls “aggressive” move into overseas markets

“The channel shift is going to move to the big warehouses,” he said.

“They are the format that offers customers the lowest price and the largest range, and the freshest food, and customers have always migrated to those factors.”

He added that the startups posed more of a danger to smaller stores, which also depend on “top-up” shopping.

Some experts believe Big 4 convenience stores face an existential threat from on-demand grocery firms.

Ocado revealed yesterday that its retail revenue in the six months to May 30 grew by 19.8 per cent, well below the 39.7 per cent recorded by February.

It blamed the drop on customers buying less and eating out more as lockdown restrictions lifted.

IGD predicts that groceries delivered in under an hour, known as “quick commerce”, will drive online shopping growth and reach a value of £3.3 billion in the UK.

The analysis accounts for startups like Weezy and third-party providers like Deliveroo, but also supermarket services like Ocado Zoom.

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