Following yesterday’s release of Ocado’s half-year figures, Aliyah Siddika, retail analyst at GlobalData, offers her view:
“Ocado Retail has had another strong start to the year, as retail revenues accelerated on an already impressive comparative period. Strong growth in customer acquisition and retention fuelled this performance, highlighting Ocado’s commitment to enhancing customer experience. The online grocer reported a 16.3% increase in retail revenue for the 26 weeks ending 1 June 2025. This performance exceeded the UK food & grocery online growth forecast of 7.5% for the first half of 2025, as projected by GlobalData, suggesting that it has gained significant market share.
“Ocado Retail has announced an increase in profitability, with an adjusted EBITDA of £33.3m for its retail division. This figure represents a £12.6m rise compared to the previous year, which, alongside profit growth in Ocado’s other operations, has driven Ocado Group’s share price up. Despite rising inflation at the beginning of the year, Ocado Retail has managed to keep costs down by implementing and enhancing technologies such as ‘tote-fill rounding’ to optimise decanting products, which have optimised storage efficiency and enhanced productivity.
“A key factor in Ocado Retail’s success last year, which is continuing into this year, has been its focus on customer acquisition and retention. The online grocer has seen a 14.7% increase in average weekly orders, reaching 491,000, thanks to a 13.4% rise in active customers and a 12.4% growth in mature customers (those who have placed five or more orders). Promotions like 25% off the first order and three months of free access to the Ocado ‘Smart Pass’ have effectively encouraged repeat business. Ocado’s exclusive partnership with Marks & Spencer also remains a crucial factor in its appeal to customers. However, Ocado is not solely relying on this exclusivity as it has also expanded its selection of smaller brands such as Hip Pop, Clonakilty, and Better Nature, all of which have expanded their product ranges at Ocado this year. This variety helps keep customers engaged and encourages them to explore new options.
“Price has been less of a focus for Ocado this year, with no visible extension of its pricing strategies, such as its ‘Big Price Drops’. While these strategies have successfully enhanced the grocer’s value perception, it is crucial for Ocado not to become complacent. Continued investment in price management is essential, as pricing remains a top concern for consumers. In the first half of the year, Ocado’s average selling price rose by 1.4%. Although this increase is lower than the UK grocery inflation rate of 3.1%, there is room for improvement, as it is only 0.1ppts below the average selling price for the first half of 2024.”
NAM Implications:
- The key for Ocado Retail has been a focus on customer acquisition and retention.
- i.e. delivering ‘more than it says on the tin’…
- …helps encourage repeat sales.
- Resulting in a 13.4% rise in active customers…
- …and a 12.4% growth in mature customers…
- …in today’s uncertain climate.
