Ocado Retail, the joint venture between the online supermarket and M&S, has reported revenue of just under £560m for Q3, a 7.2% increase in sales on the same period last year. It credits its ongoing ‘Perfect Execution Programme’, a holistic campaign to highlight discounted prices and “perfect delivery” times, as the core reason behind the strengthening of its customer proposition.
Ocado Retail CEO Hannah Gibson says: “We are delivering on this plan and have great momentum in the business, with revenue growing faster in Q3 than in H1 and a return to positive volume growth in the last month of the quarter.”
She adds the company is confident it can deliver full-year profitability.
It is a change from the sentiment expressed in Ocado’s half-year results, in which Ocado Group’s CEO Tim Steiner admitted that discounting and vouchering was a “balancing act”, albeit one that it was pursuing to attract new customers.
That strategy was tied in with a change in its brand marketing strategy, which was designed to make the retailer seem more “relatable”. It also put the reported £289.5m loss down in the first half of the year to £77m in exceptional costs accrued over the first half of 2023.
While competition from other online grocery companies is increasing, Ocado states the number of active customers to which it has access reached 961,000 at the end of Q3, a 1.5% increase on the previous year. “Mature” customers – those who have made at least five shops at Ocado.com – grew 6.6%, suggesting that a growing proportion of its customers are sticking around rather than trying alternatives.
Gibson cited discounting as being at the heart of that growth, saying: “I would like to thank the great team at Ocado for their relentless focus on the needs of our customers, as they navigated the cost of living crisis.”
The average basket value at Ocado.com was up 4.2% while the number of items per basket remained steady quarter-on-quarter at around 44 items, suggesting the focus on highlighting price discounts is appealing to its customers.
The results additionally state the group’s collaboration with Marks & Spencer is set to deepen, with “hundreds of new M&S lines” to launch this autumn. It also plans to open a new robotic customer fulfilment centre in Luton designed to improve the overall customer experience.
Shares in the online retail and tech company jumped 3.25 on the back of the results.