The volume growth helped the 50/50 joint venture between Ocado Group and Marks & Spencer report a 7.2% rise in revenue to 570 million pounds ($705 million) in its third quarter to Aug. 27, up from 5% growth in the first half.
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Ocado Retail said its fourth quarter had begun “positively” and shares in Ocado Group, which have swung wildly in recent months, were up 3.2% on Tuesday, while M&S shares were up 1.8%.
Online’s share of Britain’s total grocery market was about 7% before the onset of COVID-19 in 2020. It peaked at about 15% during the coronavirus pandemic, but has since fallen back to about 10% as shoppers returned to stores.
Ocado Retail CEO Hannah Gibson told reporters the volume growth reflected a 1.5% increase in active customers to 961,000, a 1.9% rise in average orders per week to 381,000 and a stabilisation in average basket size at 44 items.
“Those three things coming together means that volume growth has come earlier than expected,” she said, noting it had not been anticipated until the fourth quarter.
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Gibson said the shift to online shopping would step up when Britain’s cost of living crisis eases. “If you just think about Generation Z of today, we’re not going to be seeing 10 or 11% of those shopping online, it is going to be more,” she said.
Ocado Retail’s average selling price was up 8.4% in the third quarter. It noted this was lower than market inflation, which is running at 12.2% according to the latest industry data.
Since June, Ocado Retail has reduced the prices of more than 650 items, said Gibson.
Ocado Retail said it still expected to report “mid-single digit” revenue growth and “marginally positive” core earnings, or EBITDA, for its full 2022-23 year, versus a loss of 4 million pounds in the previous year.
