Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Julia Kollewe

Ocado has record Christmas sales but people are buying fewer items

Ocado vans, new livery
Ocado says it beat the market on inflation, with prices up 9.4%. Photograph: Jake Darling Photography

Ocado Retail enjoyed record sales over Christmas but customers are putting fewer items in their baskets in response to higher prices and the cost of living crisis.

The online grocer, a joint-venture with Marks & Spencer, said sales were up 15% in the five days before Christmas. Party food and English sparkling wine sales jumped 35% and 70%.

More than 72,000 orders were made on a single day – the highest it has ever seen.

However, Ocado said the average value of people’s orders over the last three months of last year was £117, a drop of 1.3% compared with the same period last year. This was because, despite inflation pushing up prices by 7.6%, its customers were putting fewer items in their baskets, – 45 on average – with basket volumes falling by 8.3% year-on-year.

Ocado enjoyed booming sales during the pandemic, when many people switched to online shopping, but that trend has faded. Full-year revenue for 2022 dropped 3.8% year-on-year to £2.2bn, but was 40% higher than in 2019.

Shares fell 5% on Tuesday morning, making Ocado the biggest faller on the FTSE 100.

Hannah Gibson, the chief executive, said people were buying more chilled and frozen food to avoid waste “because they are more prudent with their shopping habits”, but also more ready meals because they are spending more time at home to hybrid working.

Ocado said it beat the market on inflation, with prices up 9.4%. Grocery price inflation across the eight biggest UK supermarkets was 13.9% during the quarter to the end of November, according to a Which? report, the highest rate for 30 years.

Ocado’s average selling prices rose 7.6%, after a 1.8% impact from customers trading down within the basket. It said its Everyday Saver lines had been in line with, or below, its larger UK competitors, as it sought to help customers to manage living costs.

The grocer predicted that basket sizes would remain lower in the first half of this year than a year earlier, but expects a recovery in volume growth and lower costs relative to sales later in 2023. It expects full-year revenue growth to be in the mid-single digits.

Ocado grew its share of online grocery to 12.3% from 11.7% the year before, Nielsen figures show, attracting more customers who tried online shopping for the first time during Covid. Online sales in the UK appear to be stabilising at about 11% of the total – versus 6% before the pandemic – and this is expected to grow next year, according to industry estimates.

Gibson said the company would be “investing in value to help customers manage cost of living pressures, while keeping tight control of our costs”.

Ocado’s new-generation warehouses are more productive than its first robotic warehouses, with robots picking more than 200 items an hour at Andover and Purfleet, compared with 150 in Hatfield. The sites also have much lower energy costs. The company is building robotic warehouses for other retailers around the world, including in South Korea.

Ocado has expanded its rapid delivery service, Zoom, and now has four sites, including Leeds. These are expected to bring in about £80m of annual sales eventually.

Richard Hunter, head of markets at the trading platform Interactive Investor, said: “Ocado does not immediately register as a discount name and, in the current environment where a cost of living crisis is seeing many search solely for value, there has been an impact. In addition, inflationary costs, investments in further capacity and higher marketing costs have all weighed on performance.”

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.