Ocado Group CEO Tim Steiner has said its customer basket size has “gone back to pre-Covid levels,” despite inflation having risen above 17% this month.
This comes as Ocado also achieved its largest ever market share of 1.9% last year, according to data by Kantar, however the online-only supermarket suffered a £4 million loss in its full year results, with sales dropping 3.8% to £2.2 billion for 2022.
GlobalData retail analyst, Joe Dawson said Ocado’s losses stem from the faltering online food and grocery market.
“After a turbulent year of inflationary headwinds and macroeconomic challenges, Ocado has been one of the losers in the food and grocery market as consumers returned to instore shopping and switch to discount retailers for their food and grocer shopping.”
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He said that operating purely online hindrered Ocado “as consumers shifted away from purchasing food and groceries online as consumers lives started to return to normal in early 2022 and rising costs led to consumers seeing grocery delivery as a luxury rather than a necessity.”
The total number of active Ocado customers increased 13% year on year to 940,000, however, Dawson said this was restricted “by both average basket value and average basket size falling 7.5% and 11.5% repectively as consumers returned to physical stores for the bulk of their shopping.”
Edison Group director of content, consumer and media, Russell Pointon added that looking ahead, “investors will be keeping a close eye on whether this decline in basket sizes continues into 2023, or if the easing inflation in the coming months will give customers more confidence to return to larger basket sizes.”
However, while Steiner claims that Ocado’s basket sizes have returned to pre-pandemic levels, he also said that it has “very good” customer loyalty.
Chartered Institute of Marketing CEO, Chris Daly said that “with competitors such as Tesco increasingly matching the discounts offered by budget supermarkets,” Ocado is approaching a “tipping point” where it will need to decide how to position itself.
He added that its essential Ocado “defines its target market, creating coherent, clear messaging that stands out in the competitive market.”
Today (28 February), the retailer launched its new Price Promise which looks to compare prices against over 10,000 like for like products at Tesco, as Ocado Retail CEO, Hannah Gibson explained the business knows “how important value is” to consumers amid the cost-of-living crisis.
