Online supermarket Ocado Retail has delivered its “biggest ever” Christmas despite shoppers buying less and shopping less frequently as they respond to the cost-of-living crisis.
The company – a joint partnership between Ocado and M&S – has held its guidance for FY2022 after posting a retail revenue of £549.4m, up 0.3% for the 13-week period to 27 November 2022. This was below the initial prediction of mid-single digit sales growth.
Robust Q4 sales and a record Christmas performance – with sales and order numbers both up over the five days before Christmas (by 25% and 13% respectively) – have given the retailer “strong momentum” as it enters the new fiscal year.
Looking ahead, the company said it expects basket sizes to continue to shrink and earnings to fall in the first half of 2023, picking up in the second half as revenue growth reflects the impact of price inflation.
It expects full year revenue growth for FY2023 to be in the mid-single digits.
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While active customer numbers for Q4 grew by 12.9%, to 940,000, the number of orders placed grew by just 1.9% year-on-year. The increase in customer numbers was also offset by a “reduced frequency” in customer shopping as customers return to in-store shopping and respond to the cost-of-living crisis.
Average basket value also dropped, by 1.3% to £117, with inflation driving a faster normalisation from the high volume customer baskets experienced during the pandemic.
The 7.6% increase in average selling price per item was more than offset by the “challenging consumer environment” which saw customers buying less, with a 8.3% fall in the average number of items per basket, from 49 items last year to 45 items – in line with pre-pandemic levels.
Ocado Retail has also continued to grow its share of online grocery, increasing to 12.3% by the end of the quarter, up from 11.7% in the previous year, as it attracts customers looking for the best online experience.
“We now have close to 1m active customers, our largest ever customer base and we see huge potential to convert those who have now trialled online shopping elsewhere to become Ocado customers,” said CEO Hannah Gibson.
“The year ahead will set us up to deliver strong sales and profit growth over the mid-term. In 2023 we will continue to strengthen and improve our leading customer proposition, including investing in value to help customers manage cost of living pressures, while keeping tight control of our costs.
We will also be doing much more to unlock the potential of our partners, combining the benefits of Ocado’s technology with the magic of M&S products.”
Describing the current market environment as “challenging for everyone” Gibson said she was “excited” for the future of Ocado Retail.
“Building on 20 years of amazing service and innovation, we are confident of continuing to raise the bar in online grocery and working with our partners to deliver the very best experience for our growing customer base.”
