Ocado Powers Through Spending & Consumer Crisis with Ocado:ReImagined

With more than 20 years of experience in the online grocery market, Ocado is capitalizing on the worldwide shift to online shopping. The company’s strategy revolves entirely around its cutting-edge technology and unparalleled IP. 

With constantly improving returns and an unmatched customer offer, Ocado's market-leading technology helps its partners succeed in the online channel. Ocado Smart Platform (OSP) is an all-encompassing set of solutions specifically created for the online grocery market. These solutions are backed by solid economics and propel a competitive customer offering. Ocado's mission is to revolutionize online grocery retail by empowering some of the most forward-thinking retailers in the world to conduct their grocery business online profitably, scalably, and sustainably. 

“Our agenda is very much focused on the factors that are key to delivering both the future and the proof the world is seeking that we really can change the way the world shops, for good,” said Ocado’s Chairman, Rick Haythornthwaite in his Annual report note. 

Ocado revealed seven significant innovations last year under the umbrella name Ocado Re:Imagined, which the company expects to further alter the economics of the Ocado Smart Platform (OSP) for partners and Ocado Group. Partners purchasing a CFC for delivery beginning in the second half of 2023 will have the new features activated, and orders placed before the introduction of Re:Imagined can be retrofitted to include many of the enhancements. 

Ocado has grappled with COVID unwind in its retail division, accelerated by a spending and consumer crisis. “The unfolding consumer environment has been more challenging than anyone expected at the start of the year. By the second half of the year, consumers were carefully managing the cash spend of their shopping basket,” said Ocado’s Chief Executive Officer, Tim Steiner, in the Annual Report note. “In practice, this means shopping fewer items, cheaper items and, or, less frequently. For Ocado Retail, these trends came alongside tough comparatives from the pandemic period and some natural attrition in the online channel once consumers were able to return to their normal lives.”

Despite these challenges, the company only experienced a slight drop in revenue this year. A more significant statistic is that Ocado Retail finished the year with 940k active customers, 13% up from the year before, underscoring the service's underlying demand.

Ocado was able to make a lot of progress. First and foremost was the rapid rollout of customer fulfillment centers (CFCs). Ocado has now established more CFCs in the international market compared to its base in the U.K. Ocado has also built up a dedicated client support team that helps its partners reap the full potential of CFCs. This support is available to help early adopters absorb new optimization and early learnings from Ocado Re:Imagined. 

“The Ocado Re:Imagined benefits are now tangible. We can show a clear link between the technology R&D and our future financial returns and the financial returns of our clients, including our optimized site design,” said Steiner in the fourth quarter (2023) earnings call. “Our balance sheet has been strengthened, providing the capital for our future growth. And now we have the imminent launch of our new capital-light, highly efficient automated fulfillment solution for use outside of e-commerce grocery.”

Ocado believes that the group’s most significant success lies in its ability to combine execution and innovation, which involves doubling the number of live sites for its partners while advancing further in its extensive new program - Ocado Re:Imagined. The company now has more than 20 automated, live sites for six clients spanning five countries. Furthermore, these changes can help Ocado stay ahead of its competitors regarding ownership cost, operating cost, and the platform's flexibility.