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QUESTIONS abound ahead of Ocado’s (OCDO) full-year results next Tuesday, which will be the first we’ve heard from it since its pre-Christmas update.
Did Christmas 2021 turn out to be “the best ever Christmas”? Is the scheduled summer opening of the Bicester depot on track and about to make a hat-trick of “fastest ever ramps-ups” and has Ocado secured its one millionth customer yet?
You have to ask because much was made of all three when Ocado gave its trading statement for the 13 weeks to 28 November 2021, just 10 days before Christmas.
However, there are now a couple more pressing questions that could override these. Namely how tight the cost of living squeeze is going to get. And obviously what that means for the weekly shop and ultimately Ocado’s share price. And also, whether the year ahead could very well end up being all about simplicity and efficiency for the big supermarket groups, despite whatever grand plans they currently have on their 2022 agenda.
If annual food bills are about to rise by an average of £180, as research group Kantar is forecasting, then shoppers are going to be increasingly likely to be on the hunt for deals and discounts and that means that every one of the major supermarket chains is going to be forced to throw everything they’ve got at being the best value, if they’re to stay in the game.
Doing what they do well - namely as cheaply and as efficiently as possible - will be key. Tesco knows that, which is why its Jack’s discount stores chain, launched solely to go head-to-head with the German discounters Aldi and Lidl, has been pulled. As will be meat, fish and deli counters at 315 Tesco stores.
Ocado, a joint venture with Marks & Spencer, might not scream price competitiveness, however, it does offer convenience and there could well be a tussle between cost and convenience in some quarters that goes in Ocado’s favour.
With the ability to shop from home, keep a keen eye on the weekly budget, and offset the odd M&S extravagance with keenly-priced Ocado own brand or other branded products (of which there is an impressive array) it could prove to be a winner with shoppers. Meanwhile, Ocado Retail with its reliance on technology and an absence of both expensive-to-run stores and costly workforce headcount, could keep a tighter lid on outgoings more easily than its “traditional” competitors.
That technology is also, of course, another potentially highly lucrative revenue stream for Ocado as well. Designed to attract new corporate customers and head off rival start-ups, its technological innovation, from lighter “bots” to beefed-up automated loading of delivery orders, is now available at scale, meaning costs are cheaper for both it and its customers.
Ocado’s full year results are due out on Tuesday.
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