UK markets open in 1 hour 46 minutes
  • NIKKEI 225

    29,374.08
    +42.71 (+0.15%)
     
  • HANG SENG

    28,787.11
    +149.65 (+0.52%)
     
  • CRUDE OIL

    65.11
    +0.40 (+0.62%)
     
  • GOLD FUTURES

    1,820.00
    +4.30 (+0.24%)
     
  • DOW

    34,548.53
    +318.19 (+0.93%)
     
  • BTC-GBP

    40,169.02
    -933.53 (-2.27%)
     
  • CMC Crypto 200

    1,450.18
    -21.23 (-1.44%)
     
  • ^IXIC

    13,632.84
    +50.42 (+0.37%)
     
  • ^FTAS

    4,032.10
    +20.59 (+0.51%)
     

Amazon is no grocery threat, says Ocado boss

  • Oops!
    Something went wrong.
    Please try again later.
Laura Onita
·2-min read
  • Oops!
    Something went wrong.
    Please try again later.
Ocado driver
Ocado driver

The boss of Ocado has dismissed the threat of losing ground to Amazon, calling it a “very small competitor”.

Tim Steiner, co-founder and chief executive of the FTSE 100 online retailer, said Amazon's impact on the UK grocery market was “negligible” and it would have to open "an awful lot of stores” to win a bigger slice of the market.

The remarks came after Amazon opened its second till-free supermarket in London this week and launched its own-label range of hundreds of products.

“It doesn’t mean it’s not clever tech, but it won’t have a big impact on the [grocery] market,” said Mr Steiner, adding that the home delivery offering was almost at an “unnoticeable level” online.

Amazon store - Amazon
Amazon store - Amazon

Ocado sales jumped almost 40pc to £599m in the 13 weeks to February 28 following strong demand over Christmas and the third national lockdown. Weekly orders rose by 2.5pc to 329,000 during the quarter.

The company is seeking to open at least 12 new micro sites, mostly in London, for its one-hour Ocado Zoom delivery service.

Finance chief Niall McBride said the company wanted to take the model to other cities. The first Ocado Zoom opened in Acton in 2019.

Locations could be hard to find in the capital for smaller warehouses, but he hoped to have about six new sites opened within two years.

Ocado expected sales growth to slow down during the coming months compared with last March, when Britons stockpiled cupboard essentials, as lockdown restrictions ease.

Nevertheless, Mr Steiner again said that the permanent shift to online grocery shopping was here to stay and Ocado is well-placed to benefit from it.

Figures from Nielsen showed that buying groceries online accounted for 16pc of the total market in January, up from 8pc year-on-year.

Ocado Retail, which is half-owned by Marks & Spencer, has been growing faster than mainstream rivals during the pandemic, but it still only has a 1.7pc market share, according to Kantar.

It has struggled to cope with the boom in internet orders during the pandemic as its robotic warehouses, where groceries are picked and packed, cannot be built overnight, leaving it relatively inflexible.

Meanwhile, traditional rivals such as Tesco and Sainsbury’s managed to double their capacity by hiring more workers.

Weekly orders increased by 2.5pc to 329,000 at Ocado during the quarter. Tesco has reached 1.5m per week.

Mr Steiner said: “We’re ahead of most supermarket groups in terms of the operating profitability. It doesn’t mean store pick doesn’t have a role, it does enable you to scale, but it’s the right asset [only] for immediacy.”

Ocado plans to open two more robotic warehouses this year as it tries to ship orders to a growing customer list.