Ocado sales sink amid return to office and cost of living crisis

Online grocer Ocado has warned that its sales growth will be less than half the rate it had hoped for as the cost of living crisis and return to office work and dining out hit trade.

The online grocer, which is partly owned by Marks & Spencer, said it now expected growth of less than 5 percent for the year to the end of November, compared with 10 percent anticipated.

The forecast came after sales fell 8 percent in the two months to April 25, compared with a 5.7 percent decrease in the previous three months. Shoppers have been buying fewer items than usual.

“The trading environment has deteriorated,” Ocado said in a statement, “with the cost of living crisis compounding the impact of a return to more normal consumer behaviours as restrictions have ended and many people return to the office.”

Online grocery sales rose during the height of the coronavirus pandemic as shoppers wanted to avoid crowded supermarkets and more people were able to accept home deliveries as they had switched to working from home.

While the online grocery market remains at least 50 percent larger than before the pandemic, sales have sunk back in recent months to be about 12 percent of total grocery sales. Online grocery sales had touched a share of more than 14 percent two years ago.

Since food prices were rising by about 4 percent or 5 percent, Ocado pointed out that customers were ordering one or two fewer items each shop than before, hence the average basket size value was down by about 9 percent compared with a year ago.