Growth slows at Ocado as price deflation hits

THE support of Morrisons’ online development has helped Ocado grow in the first half of the year,

Revenues to 15 May 2016 reached £584.2m, up from £507.7m in the same period the year before.

Ocado has agreed to extend its capacity for online business with Morrisons, and it is seeking growth opportunities with international grocery retailers.

Tom Steiner, chief executive at Ocado said that although they were gaining market share, “the market remains competitive with ongoing price deflation but our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate.”

Despite the apparent optimism, analysts have said the online supermarket should not be complacent about the threat posed by Amazon Fresh, which signed an agreement with ocado customer Morrisons in February.

Phil Dorrell, Partner, Retail Remedy retail consultants said: Ocado are entering a new era with the real threat of Amazon Fresh knocking. Increased competition from Amazon Fresh does increase the size of the online grocery market in their core territories, but it also intensifies the degree of differentialisation needed to grow share.”