Market share magic: Ocado’s rise

For the seventh consecutive month, Ocado are the UK’s fastest growing grocer predicting impressive double-digit sales growth for the year.

Although the online market in general is performing well and expanding (forecasted growth of above 3% in 2024) Ocado are outperforming their competitors which in turn has led to an increase of 0.2% in their overall market share, now at 1.8%.

What are the driving factors behind current performance?

Customers

The strategy for some time has been to focus on choice through large ranges, a hassle-free service online and reassuringly good value – the “Perfect Execution” programme.

Whilst historically, Ocado have offered a strong choice of products and customer service, they haven’t always been considered as ‘good value’. However, their latest 'big price drop', which has seen them cut the prices for over 400 products by an average of 17%, and their 'Price promise', which sees them match like-for-like shops to Tesco, are perhaps now driving a change in perception.

M&S Partnership

Although not the first time Ocado have partnered with another retailer (previously Waitrose) they have been with M&S since 2019 with M&S products available on Ocado.com since 2020 and has certainly been beneficial for both parties. Ocado have benefited from M&S’ established quality and innovative food range, whilst M&S have benefited from the distribution power and efficient model Ocado online delivery provides. It's no surprise M&S have also returned strong results with a focus on food and the strong partnership with Ocado.

Challenges

Despite the strong sales performance, Ocado face the same challenge as most retailers, the Discounters!

While Ocado has improved consumer perception around pricing, their partnership with M&S means they still target a similar audience and how they address the price gap with Discounters will be key to driving future growth. Reliability and customer service will always be important, price and value in recent years has above all been the primary focus of the consumer and this unlikely to change anytime soon.

Would it be more beneficial for them to follow trend and match prices to Aldi or Lidl instead of Tesco?

Do they need a more up to date strategy around offers in the form of a loyalty scheme?

Or are they happy to just on maximise sales through focus on delivering as well as they can within the space they currently occupy?

We can keep you up to date with the UK FMCG market through insights from our Panoramic Pricing Service. If you would like to find out more about what we can offer and how we can help your business, please contact us here.