Yahoo Finance Shoppers will keep shunning supermarkets, says Ocado boss
Shoppers will shun supermarkets for good after embracing online sales during lockdown, the boss of internet grocer Ocado has said.
Customers rushed to the web for their weekly shop following orders to stay at home during the height of the Covid-19 outbreak, and Ocado's chief executive Tim Steiner believes many will never go back to their old habits.
Surging demand for the company's products pushed half-year sales past the £1bn mark for the first time, with UK revenue soaring 27pc as families opted for larger weekly shops.
Mr Steiner, who co-founded the business two decades ago, said Ocado now plans to rapidly expand both its own website and the production of robots for other supermarkets' warehouses.
He 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."
It came as the online grocer narrowed pre-tax losses to £40.6m for the six months to the end of May, compared to a loss of £147.4m for the same period last year.
The company blamed investment in its fast-growing overseas robots business for the loss. It took a £39m hit linked to a fire that destroyed one of its automated warehouses in Andover, Hampshire last year.
Ocado plans to spend about £600m this year, mostly on its licensing business.
It has agreed to kit out 54 robot depots for seven supermarkets including Kroger in America and ICA in Sweden, to help them compete with the likes of Amazon and to capitalise on the boom in online grocery.
The firm's shares have surged in the past few years due to surging demand for its automated grocery collection systems.
Internet sales have almost doubled as a share of the grocery market from 7pc before the pandemic to 13pc in May, according to data firm Nielsen.
Ocado, which last month raised £1bn, said it is positive abotu the year ahead but could not give detailed guidance due to massive uncertainty.
Analysts at RBC said: "While we believe there is scope for further international deals, we think there is a great deal for management to now execute on."
Ocado will end its long partnership with Waitrose in September and switch to selling products from Marks & Spencer, which paid £750m to muscle in last year. M&S chairman Archie Norman has already warned that this transition will be slow.
Mr Steiner played down suggestions that his firm's website will be unable to cope with demand.
At the peak of the crisis Ocado was forced to retool its platform because too many shoppers were trying to book delivery slots. It has been operating at capacity since.
Shares fell 2.1pc to £19.89 but have nearly doubled since late February, leaving the company worth almost £15bn - more than three times the value of Sainsbury's.
