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And we know it too. Gone are the days of fighting for the last packet of pasta or loo roll on the supermarket shelves, or logging-on at the crack of dawn to secure a precious online delivery slot. An empty fridge is no longer a cause for concern, just a reminder to pop to the shops on your way home and having made inroads into that ‘stockpile’ of tins and jars, you can actually see the back of your cupboards again. Things are literally starting to look, well, a little more normal.
Today, posting its first quarter results, Sainsbury’s says there are clear signs that shoppers’ habits are heading back to how they were; shoppers are back in store more often these days and business is brisk, with sales stronger-than-expected in the 16 weeks to 26 June, up by 1.6% on a year earlier.
On the other side of the new normal for grocery shopping, online grocer Ocado can also vouch for more of a return to old ways, having seen order sizes getting smaller over recent weeks. However, it is interesting to note that online sales at both Ocado and Sainsbury’s are still far higher than they were before the pandemic.
Sainsbury's, whose online sales were 29% in the first quarter of the current financial year than the same time last year, and a staggering 142% higher than before the pandemic, says 18% of its sales are now online, compared with just 8% in 2019-20. Sainsbury's said grocery sales benefited from higher in-home consumption due to continued Covid-19 restrictions, plus growing market share. Underlying pre-tax profits for the year to December are now expected to be at least £660 million, with progress weighted to the second half, the company said.
Meanwhile Ocado, since its tie-up up with Marks and Spencer, has seen its revenue rise by 21% to £1.32 billion in the six months to 30 May, including £1.22 billion from M&S alone.
The question now may be not whether online grocery shopping is part and parcel of many people’s typical/normal shopping habits - the numbers show it clearly is - but whether Sainsbury’s and co have reached “peak” online.
That is obviously less of an issue for Sainsbury’s than Ocado, which relies 100% on online sales, but with 777,000 active customers, and an increase of 22% on the previous year, Ocado is holding its own in the new supermarket game of tug-o-war.
And let’s not forget that Ocado is not a supermarket in the traditional sense anyway. Its prowess lies in its Ocado Smart Platform technology, which has transformed M&S’ food business already and will no doubt be doing the same for Spain’s Alcampo. The deal just announced with Auchan, which owns the €4.5 billion-a-year revenue generating supermarket chain, will take some time to reach Ocado’s bottom line, but it’s another potentially massive leap forward for the so-called “Microsoft of retail”.
When it comes to tug-of-war games, supermarket chain Morrisons may well find itself tied up in knots if the latest news is anything to go by. It has emerged that a US investment firm is considering making a rival offer for the UK’s fourth-largest supermarket, just days after Morrisons said it had accepted a £6.3 billion offer from another US investment group led by the owner of Majestic Wine.
So far Apollo Global has only said it was considering the move, and no approach has yet been made to Morrisons. But it is the third firm to show an interest in the UK chain in two months, proving it is hot property for overseas firms looking for bargains in the UK market.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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