Shoppers reduce their spend at Ocado as cost of living bites

Shoppers have cut back their spending as they try to offset the growing cost of living, online supermarket Ocado has said.

The average basket that customers checked out reduced by 6% to £116 in the 13 weeks to the end of August, and have shrunk even more rapidly since.

A large part of the change was due to customers switching to cheaper alternative products, Ocado said.

Chief executive Tim Steiner said: “We remain focused on providing Ocado Retail customers with the best possible value to help them navigate the cost-of-living crisis, and are encouraged by the positive underlying trends in the business which underline the value of Ocado’s differentiated proposition to customers.”

Meanwhile, the business itself is also feeling the pinch, warning of a £20 million to £25 million additional hit from its annual electricity and fuel bill.

Electricity prices have tripled, while fuel is up 15%, Ocado said.

The cost of dry ice – vital for chilling its products – also soared and will add between £15 million and £20 million to its annual bill.

Bosses said they are exploring alternatives to dry ice, but added that increased costs are likely to weigh on the supermarket’s profitability in the fourth quarter.

However, on the upside, the order book looks healthy, with the number of orders per week rising by nearly 11% from a year ago to 374,000.

It shows that a record number of new customers are using the company – active customer numbers rose 23% year on year to 946,000.

Third-quarter sales rose 2.7% to £532 million as a result, and are up 42% compared with before the pandemic.

Even stronger growth is expected in the fourth quarter, Ocado said.

Mr Steiner added: “As we have seen in (the third quarter), customer numbers are sharply up as consumers either switch from other providers or try online grocery for the first time; underlying productivity in fulfilment and the last mile continues to improve.”