Ocado’s finance boss Duncan Tatton-Brown has shrugged off the prospect of food price inflation and insisted the etailer “could get away with being more expensive”.
Tatton-Brown admitted that prices were starting to increase in certain categories, driven by the fall in the value of the pound following the Brexit vote and the subsequent spike in sourcing costs.
But he claimed the online grocer’s customer service proposition left it well-positioned to cope with further price rises.
Speaking after unveiling a 13.1% jump in first-quarter retail sales to £352.4m, Tatton-Brown said: “For UK grocers, it’s assumed that around a third of the items we sell are imported from outside the UK.
“Obviously, the pound has fallen versus major currencies across the world where we source our products from.
“They have become more expensive. The industry is not inclined to pass those prices on, but that’s starting to happen in a small way.
“We are a profitable business, we are growing faster than anybody else and we are becoming more efficient, so we don’t mind the competition, which is why we continue to follow market prices”
Duncan Tatton-Brown, Ocado
“We follow players in the market, so we don’t set the terms or the pace at which that happens, but if the market moves its prices, we will follow.”
Asked whether it was a concern that the market was not raising shelf prices at the same rate its sourcing costs were increasing, Tatton-Brown claimed it was “not a worry at all”.
He added: “We are a profitable business, we are growing faster than anybody else and we are becoming more efficient, so we don’t mind the competition, which is why we continue to follow market prices.
“The quality of our service is very good. We could probably get away with being more expensive, but it’s not what we try to do – we try to follow the market.”
Ocado is continuing to pursue a deal to license its Ocado Smart Platform technology to an overseas retailer, and Tatton-Brown insisted it was “as confident as ever” of securing a partner.
Last month, the etailer drafted in former Sainsbury’s strategy director and group development director Luke Jensen to take on the newly created role of chief executive of the Ocado Smart Platform, as it ramps up efforts to seal a deal.
“Luke is busy,” Tatton-Brown said.
“It was quite nice for us that on Luke’s very first day working for Ocado, he flew the night before outside of the UK and he, I and our team met with a retailer overseas.
“That’s symptomatic of what’s happening. We are meeting people.”
Ocado boss Tim Steiner had initially voiced his goal to sign an international deal by the start of 2016, but Tatton-Brown dismissed suggestions that the business could postpone or abandon its overseas ambitions following the protracted talks.
He insisted: “Given the interest that there is, that’s not something we are considering. We remain as confident as we have always been and we’ll continue doing this.”