Ocado and M&S product switchover on track despite coronavirus

The pureplay grocer’s chief financial officer Duncan Tatton-Brown said the crisis had thrown up some issues for the joint venture in terms of communicating between the two brands and with suppliers. However, he maintained that the switchover date from Waitrose products to Marks & Spencer lines was on track.

“Clearly there are some constraints in terms of what we’re going through in terms of how we’re able to meet and discuss, both between ourselves and with suppliers. But, generally, most people are aware that most businesses can continue with different ways of interfacing.

“As much as one can guarantee anything at this point in time, consider this a guarantee. We expect it go well and assume no change whatsoever to the date of the switchover,” he said.

Tatton-Brown said Ocado had been pleased at its ability to grow its capacity and business by 40% in the two months since the lockdown began, but admitted it was “disappointed” it had not been able to serve more customers.

“Have no doubt, if we could have grown capacity faster, then we would have done. We’re trying every week to serve more customers. We’ve done a really good job, but we wish we’d been able to do more and we’ll keep trying to do more,” he added.

The Ocado finance boss said the retailer’s existing “mature” customer fulfilment centres (CFCs) were “operating at levels of capacity that we’ve never seen before” and admitted that in terms of further capacity growth, the retailer was limited by how soon it could bring new CFCs online.

Tatton-Brown said across the industry, the demand for online groceries was still far outstripping capacity and as a result “we can’t meet the demand and as one of the players in the industry we therefore share that disappointment”.

In terms of adding future capacity with new CFCs, Tatton-Brown said the reopening of its Andover warehouse that was gutted by a fire last year was on track for next year, despite the virus slowing construction.

He also defended the retailer’s service of customers on the government’s vulnerable shielding list. While he initially would not be drawn on a number for how many shielding customers Ocado has served, he conceded that the retailer has delivered to more than 150,000 such households over the last month.

“We’re not pleased – we think we’ve served more than our share of that shield list, but we’d like to serve more,” he said. “We’re doing more than our proportionate share, but that’s never enough for us so we will keep seeing if there are ways we can grow a bit more”.

He also said Ocado Solutions had seen increased interest from overseas clients due to the coronavirus and hinted that existing customers may also be looking to increase CFC orders in the near future.

He said: “We think there is more interest, but I’m not going to over-promise or commit on that. The best way of evidencing that interest is by demonstrating it with an announcement around a particular client committing to more capacity. Are there signs of it? Yes.”