Ocado Retail Drives eGrocery Adoption as Digital Channels Gain Share

With online grocery eating away at brick-and-mortar players’ market share, Ocado Retail is seeing its revenue rise.

The joint venture between British grocery technology company Ocado Group and United Kingdom-based multinational retailer Marks & Spencer announced Tuesday (Jan. 16) in its fourth-quarter 2023 earnings results that retail revenue rose nearly 11% year over year, marking a boost in performance over the 7.2% year-over-year change seen the previous quarter. Plus, consumers are engaging more frequently, with orders per week up 6.3%.

“Shopping behaviors have normalized now post-COVID,” Ocado Retail CEO Hannah Gibson commented in an accompanying video. “And we are beginning to get back to structural growth in online grocery. We’re already seeing online begin to outpace the offline channel, and we expect this channel shift to continue.

“Over the next 12 to 18 months, we’ll be embedding the foundations we’ve laid this year and raising the bar again for online grocery shopping,” she added.

The growth comes as eCommerce channels whittle away at brick-and-mortar retailers’ share of consumers’ total grocery spending. For instance, the PYMNTS Intelligence study “The Replenish Economy: A Household Supply Deep Dive,” which drew from a survey of more than 2,000 U.S. consumers, found that 48% of Amazon Subscribe & Save subscribers said they shop in physical stores less frequently or have stopped shopping in stores completely. Plus, 47% of meal kit provider HelloFresh subscribers said the same.

The U.K. has been digitizing its grocery industry more quickly and efficiently than the United States, according to Ocado Group CEO Tim Steiner’s observations last summer.

“There’s a lot for [the U.S.] to learn, and there’s changes they need to make on their own software front and stuff to drive the type of efficiencies that we would look for in other markets,” Steiner said in July.

The U.S. is also slightly behind Australia in adoption. According to the PYMNTS Intelligence survey “Consumer Interest in an Everyday App,” based on responses from more than 2,200 U.S. consumers, 61% of those who had shopped for groceries in the previous month did so via connected devices at least some of the time. Among the more than 1,000 Australian consumers surveyed, 63% did the same.

Still, eGrocery adoption is on the rise, as commerce overall increasingly digitizes. The PYMNTS Intelligence study “How the World Does Digital: Daily Digital Engagement Hits New Heights,” which drew from a survey of more than 17,500 consumers in 11 markets that account for 50% of the world’s gross domestic product, found that a 10% increase in online shopping corresponds with a 7% rise in online grocery purchasing. As such, the more consumers buy anything online, the more they buy everything online.

As Ocado Retail and other digital players continue to drive eGrocery adoption and gain market share, traditional retailers must adapt to the changing landscape. Retailers must prioritize online capabilities and enhance the customer experience to remain competitive in the evolving market.