Efforts by Ocado to shed its upmarket image appear to have helped it attract a wider range of shoppers, as figures show the online grocer’s customer numbers rose sharply in the first half of its financial year.
Tim Steiner, chief executive of the company which delivers in vans bearing the slogan “cheaper than you think”, said: “We are becoming really mainstream and we are taking mainstream customers from the likes of Tesco, Sainsbury’s and Asda. It shows mainstream customers, as opposed to over-affluent customers, are enjoying our service.”
In the first half of the financial year, a 30% year-on-year increase in customer acquisitions drove the number of active users of the service up 18.9% to 471,000. In the first half of 2014, there were 396,000 active customers – classified as someone who has shopped with the service in the previous 12 weeks
Ocado’s efforts have been helped by the rise of the smartphone, as many people own them who would have rarely used a computer, according to Steiner. He said Ocado’s association with the upmarket grocery chain Waitrose might have created the idea that its products were pricey.
“The perception rubs off on us and that might be that it is more expensive than it actually is, and that it’s a bit posh,” he said.
Ocado’s contract with Waitrose is up for review soon. It said the terms of the deal had limited the amount it could sell under its fast-growing own brand. “We would clearly like to pay less [to Waitrose] and have more flexibility but Waitrose would like us to pay more and have less flexibility,” Steiner said.
Gross sales rose 15.7% to £512m in the 24 weeks to 17 May but pre-tax profit fell to £7.2m from £7.5m a year earlier. Price cuts amid fierce competition in the sector squeezed profit margins.
Ocado was founded in 2000 as a standalone online grocer. After 15 years, it made its first annual profit last year and did a deal to manage Morrisons’ online operation. The contract created new enthusiasm from investors in the belief that Ocado would agree more such deals.
Steiner said he was confident it would sign up another retailer during this financial year, which ends in November. The new partner is likely to come from western Europe or North America.
