Ocado’s boss today claimed that lockdown means shoppers ‘won’t be going back’ to rivals’ stores as the online retailer’s half-year sales smashed through the £1billion barrier for the first time.
Tim Steiner, chief executive and founder of Ocado, has said the ‘world as we know it has changed’ for retailers since the coronavirus crisis struck as its sales in the first half of 2020 jumped up by 27 per cent.
Mr Steiner predicted the shift towards internet shopping will not be reversed even after lockdown restrictions are eased – but its shares fell this morning and experts said that while sales were up, problems with its app and website during lockdown meant its customer base remains largely unchanged.
Ocado is about to dump Waitrose and start its tie-up with M&S, with deliveries of the new products beginning in September as part of a £750 million deal.
Some consumer experts believe Boris Johnson’s plans to make masks compulsory in shops could force more people online.
Tim Steiner, CEO and founder of Ocado, said today that many shoppers will not go back to stores after lockdown
Stores have seen footfall drop during lockdown and with masks set to become compulsory next week it could have more of an impact
Mr Steiner’s comments came as the group reported a 27% jump in retail revenues to £1.02 billion due to ‘unprecedented’ demand during the six months to May 31.
But Ocado posted first-half pre-tax losses of £40.6 million after it spent heavily on the roll-out of its overseas technology offering, though this was down on the £147.4 million losses seen a year ago.
Ocado’s underlying group earnings fell to £19.8 million from £30.7 million a year earlier after the investment costs.
Mr Steiner said: ‘The world as we know it has changed.
‘As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months – and we won’t be going back.
‘We are confident that accelerated growth in the online channel will continue, leading to a permanent redrawing of the landscape of the grocery industry worldwide.’
Ocado said fees invoiced to overseas technology partners soared 58% to £73.7 million as it ramped up its international expansion drive.
It opened its first robotic distribution warehouses for Casino in Paris and Toronto.
Ocado saw sails jump up a quarter in the past six months as people did their online shop, even at No 11 Downing Street (pictured in March), but experts claim the Ocado customer base is largely the same
The group raised more than £1 billion last month through an equity and bond raise to help support its growth.
Lidl will open 25 new stores in UK this year creating 1,000 jobs – the first of 100 extra stores they say will be open by end of 2022 employing 4,000 more workers
Lidl is planning on opening 25 new stores in the UK by the end of the year, creating 1,000 more jobs.
The proposals will also see the retailer invest £1.3billion in the UK for 2021 and 2022 – seeing another 100 stores created across Britain and 4,000 new jobs.
In total, Lidl intends to open 1,000 new UK branches by the end of 2023, boosting job hopes amid the uncertainty created by the coronavirus pandemic.
Some of the 25 stores will open in Selhurst, Harrow Weald, Coleford and Llandudno Junction.
Workers at the new stores will earn a minimum of £9.30 per hour outside of London and £10.75 within the M25, which is higher than the Government’s National Living Wage.
The announcement follows the publication of Lidl’s site requirements brochure, detailing all the areas it is looking at for new stores across Great Britain, which includes locations such as Winchester, Didsbury and Cardiff City Centre.
The supermarket has also created more than 2,500 temporary jobs, to support existing teams during lockdown.
The funding will also be used to help sign up new partners to use its technology and to invest in innovation at a faster pace.
But Ocado’s shares slipped 4% despite the first-half sales boost.
Retail expert James Grzinic at Jefferies said: ‘Ocado’s first-half results show the benefits from the surge in online demand brought about by Covid-19, albeit one temporarily enabled by consumers’ willingness to take very large deliveries in unusual slot times.’
Britain’s grocers are gearing up for a massive price war amidst fears unemployment could rise above four million.
More than 14,000 jobs were lost this week as a coronavirus jobs bloodbath hit the British economy.
And analysis by the Mail has shown almost 200,000 workers have been laid off by well known firms during the crisis.
The jobs cull has left supermarket bosses scrambling to show they are competitive on price as household budgets are squeezed.
They are worried that the German discounters Aldi and Lidl will repeat the sort of market share gains made after the 2008 financial crash.
This week one industry source said: ‘Price is going to be everything over the rest of the year.’
Food price inflation has risen to 4pc, running far ahead of the 0.5pc rate of inflation, putting yet further pressure on household budgets.
Since the coronavirus pandemic has struck Sainsbury have lowered prices on 300 products, on top of their eight-week ‘price lock’ on 1,000 items.
Chief executive Simon Roberts said: ‘With rising unemployment pressure on consumer spending we’ve got to make sure our offer is really relevant. We’ve been putting a lot of emphasis on the value in our offer and invested in price. We have taken gains from discounters.’
Morrison’s said it had cut ‘and held down’ the price of 450 customer favourites, adding in half-price promotions such as, this week, half price beef brisket and mackerel.
And last week Tesco, Britain’s largest supermarket, doubled down its price war expanding its ‘Aldi price match’ promise to 500 everyday items.
Its boss Dave Lewis said: ‘I don’t see why anyone should pay more for a brand at Tesco than anywhere else.’
The supermarket claimed it had seen net switching gains of customers to Tesco from Aldi ‘for the first time in over a decade’.
Aldi and Lidl have always claimed that, despite promotions, their products remain as much as a fifth cheaper than those offered by rivals.
But the big four grocers have found a trump card during the pandemic in online shopping.
They have been able to double their capacity during the lockdown gaining thousands of new customers, with many experts saying the trend of buying online will not go away soon.
Tesco, Sainsbury’s, Asda and Morrison’s are delivering to 2.8m households each week, while the discounters are close to zero. That compares to around 1.5m before the pandemic.
Next week Chancellor Rishi Sunak will deliver his plan for rebooting the UK economy.
Opposition leader Sir Keir Starmer called it the ‘last chance to save hundreds of thousands of jobs’.
Hundreds of thousands of jobs have already been lost during the lockdown, and this week a series of large companies went into administration or shed staff in an attempt to survive.
There is of particular concern for retail and the hospitality sector, which today [SAT] takes its first steps out of lockdown, which have been starved of cash for the last 14 weeks.
At the same time businesses are facing up to the furlough scheme being pared back from August 1.