Ocado outperforms grocery rivals as it records strong start to the year

Ocado was the UK’s fastest-growing supermarket in the first quarter of the year, data suggests, as the retailer’s strategy to focus on value, optimise its offer and better target customers appear to be paying off.

Ocado increased sales by 9.5% in the 12 weeks to 17 March, according to Kantar, well ahead of the total online market which rose by 6.6%.

It was also the only grocer other than Waitrose to increase its number of shoppers over the past three months.

Indeed, Ocado’s own first quarter results, also published today, show the retailer boosted active customer numbers by 6.4% to 1.02 million over the quarter.

The online retailer, which is run as a joint venture between Ocado Group and Marks & Spencer saw year-on-year volume sales grow by 8.1% in the three months to 3 March 2024, while retail revenue was up by 10.6% to £654.3m.

Compared to the same period last year Ocado grew average orders per week by 8.4% and saw average basket value increase by 2.1%.

According to Nielsen figures shared by Ocado, its market share rose by 0.7% compared to last year, taking it to 13.5% at the end of February.

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Hannah Gibson, Ocado Retail CEO says the business has made a “strong start to the year” building on 2023’s momentum. In January, she credited the brand’s marketing initiatives for growing the number of repeat customers – those who have made at least five Ocado shops – by 9% over the year.

She says Ocado has since “stepped up” its efforts further, delivering improvements in its customer proposition across “unbeatable choice, unrivalled service and reassuringly good value”.

She adds it has bolstered its product range with the “strong growth of core M&S grocery lines” and the debut of Makers Market, which showcases small brands. It has also done work to enhance delivery slot and product availability and lowered the price of 1,700 more products alongside further expanding its own range.

Ocado credits shift in marketing strategy for improved customer retention“Our strategy is resonating with customers and volume growth is building well,” she says. “[But] there’s still so much more we can do.”

Inflation

Ocado was the fastest growing supermarket, according to Kantar’s data, with its sales growing 9.5% to take its share to 1.9%. It was closely followed by Lidl, which increased sales by 8.8% taking its market share to 7.8%.

Aldi’s growth was slower, increasing sales by 3.1% over the period, while Tesco (5.8%), Sainsbury’s (6.7%) and Morrisons (3.6%) all grew at a faster rate.

Overall, grocery price inflation dropped to 4.5%, according to the latest data from Kantar, its lowest level since February 2022.

Take-home grocery sales increased by 4.6% in the four weeks to 17 March. Sales of branded goods pushed ahead of own label during the month, though premium own-brand ranges saw sales increase by 16.1%, the fastest rate of growth for three years.

“Grocery inflation has come down significantly since hitting an eye-watering peak of 17% in March 2023. However, despite this continued slowdown, many British households are still feeling the squeeze,” says Kantar head of retail and consumer insight Fraser McKevitt.

Almost a quarter of consumers (23%) identified themselves as struggling financially, according to Kantar data – the same proportion as reported in November last year.