Ocado chief executive Tim Steiner said the “online grocery revolution” taking place will only help to further distance his firm from rivals and stay ahead of the market, as it posted its first ever full-year profit.
The online grocer made an adjusted pre-tax profit of £10.1m in the year to 30 November compared with £3.8m loss the previous year, with gross retail sales up 15.3 per cent to £972.4m.
Ocado has divided opinion ever since it was founded 15 years go, with some bears viewing it as costly business model that is likely to come under pressure as bricks and mortar grocers improve their online business.
Steiner, however, said the “seismic” changes taking place in the market would only play to their advantage: “Technology is going to get better, the relative merits of shopping online versus going in store are going to grow and stores are going to come under more competitive pressure.”
“Stores are going to have to work out how to cut costs – mainly by reducing service and range. But while they reduce their range we are increasing ours. These changes are going to lead to a very big channel shift,” he said.
Ocado signed it first third-party deal to run Morrisons’ online website in 2013 and said it hopes to strike its first deal with an international partner this year. It is also building two new UK warehouses, after signing a pre-let deal last week for a new site in Erith, Kent.