Online retail provider Ocado saw its sales rise 15.7 per cent to £511.9 million in the first half of the year, according to an interim statement issued on 30 June.
Revenue in the 24 weeks to 17 May 2015 rose 18.2 per cent to £507.7 million, while statutory profit before tax stood at £7.2 million.
In a statement, UK-based Ocado said that the period had seen ‘strong new customer growth of over 30 per cent year on year, underpinned by an increasing proportion from a broader set of customer demographics’.
“The channel shift towards online grocery shopping continued during the period, with the broader grocery market remaining characterised by intense price competition and deflationary pressures,” said Tim Steiner, Ocado chief executive.
“Against this backdrop, our relentless focus on customer satisfaction continues to drive customer numbers and like-for-like sales ahead of the online grocery market. The resilience of our business model and increasing operational leverage also mean that we have grown operating profit despite these industry headwinds.”
Ken Odeluga, a senior market analyst at www.citiyndex.co.uk, commented, "Ocado has chosen to place quite a bit of focus on what it calls continuing discussions with 'multiple potential international partners' who might adopt Ocado Smart Platform for online grocery retailing. It’s the same message Ocado gave with full-year earnings in February.
"Yet Ocado’s financial year ends late in November, leaving it only about five months to get this pivotal deal done, and there is no sense of imminence regarding such a deal in today’s statement. Without such a deal, it’s not clear that OCDO can maintain annual profitability."
In addition, Sophie McCarthy, retail consultant at Conlumino, said that Ocado "is clearly making headway towards achieving its strategic objective of constantly improving its proposition to customers. It has broadened its offer to 45,000 SKUs, bolstered by its Fetch.co.uk pets arm and Sizzle.co.uk kitchen and dining business, and has launched a number of incentives to capture new customers, including the latest ‘share £40 in vouchers’ recommendation initiative, which encourages its existing customers to invite family and friends to shop with the retailer.
"This investment is paying off. New customer numbers increased by 30 per cent versus the comparable half last year, resulting in an additional 18.9 per cent of active customers for the period. A captive audience is key in this sector. Engaging consumers from the outset amplifies the opportunity to capture spend, encourage trade-ups and drive loyalty.
"In a highly competitive sector, failing to fully engage customers has played a role in rival Tesco’s troubles, where disengaged customers began to turn away, taking a significant proportion of spend with them."
© 2015 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones.
