New M&S ranges warmly received at flourishing Ocado, says GlobalData

Following today’s release of Ocado Q3 figures for 2019/20, Thomas Brereton, senior retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Ocado Retail’s hearty quarterly revenue growth of 52.0% is undoubtedly impressive, demonstrating a notable uplift on its comparable H1 results (retail revenue +27.2%) with the business ardently trying to increase capacity to cope with higher demand across the board in UK online grocery. As well as said additional capacity (on course to increase by 40% through to 2021), Ocado also tips its hat to new supply partners M&S (replacing Waitrose at the start of September), stating that the weighting of M&S products in the average Ocado basket is higher than Waitrose prior to the switchover – proving a positive customer reaction to the addition of M&S to the range. While making comparisons to pre-coronavirus conditions is somewhat of an “apples and oranges” situation and should be taken with a pinch of salt, all signs point to a successful switchover amid turbulent market conditions.

“However, the greater operational flexibility of other online supermarkets (i.e. the ability to ramp up store-pick fulfilment faster than Ocado’s automation approach) means that the UK online food & grocery market is now forecast to grow 79.8%, and so it remains the case that Ocado is set to lose online market share this year. Although this presently appears to be a non-issue, it displays just how quickly other supermarkets have also evolved to meet new consumer needs, and Ocado will have its work cut out to grow the proposition quite as freely as it has previously.

“Ocado’s greatest challenge is now how to differentiate itself from rivals – not least from ex-comrade Waitrose, which has its own designs on rapid online expansion (and whose upcoming H1 results will be carefully perused by Ocado). Trumpeting the arrival of M&S’s value-driven Remarksable range is all well and good, but, when contending against the likes of Tesco, price is not an arena Ocado can comfortably compete in. Instead, Ocado needs to focus on promoting more unique propositions, such as the recent addition of 700 non-food M&S product lines (which includes home and baby products), and investing in the benefits of its Smart Pass delivery scheme.”