Ocado recently announced an 18 percent growth in profits, to £8.5 million, for the 24 weeks ending 15 May 2016. In its results Ocado also revealed that during this time (May 2015 – May 2016) it had increased its SKU count from 45,000 to 48,000.
Its increase in SKUs contrasted to other major retailers that have implemented opposing strategies during this time. Tesco’s ‘Project Reset’, inspired by the discounters Aldi and Lidl, saw Tesco reduce its range to provide shoppers with fewer, simpler choices, from January 2015.
Despite recent successes, analysts have argued that the launch of AmazonFresh UK poses a greater threat to Ocado, than other supermarkets, as it’s a pure play online retailer.
Tim Steiner, Chief Executive at Ocado, said that he has seen, “absolutely no impact so far,” from the entry of AmazonFresh into the UK marketplace. “We have been gaining share in the online grocery market and expect this to continue. British shoppers are choosing the benefits of grocery shopping online and we believe that the momentum of channel shift away from bricks and mortar stores will continue” (The Telegraph).
How has the number of SKUs changed over the year?
Brand View has reviewed the number of SKUs listed in Ocado over the past year (1 May 2015 – 31 May 2016) to understand the impact on its range.
The analysis showed an increase in the numbers of SKUs of 5.5 percent, from 45,989 in May 2015, to 48,553 in May 2016. When excluding General Merchandise products, the percentage increase in SKUs almost doubled to 10.8 percent.
There was a significant decline in the number of listings, following the Christmas period. The category that saw the largest number of delistings in December and January, of 4.7 percent, was unsurprisingly the Seasonal category, which included crackers, decorations and wrapping paper. This was followed by Construction Toys with 4.1 percent and Chocolate with 3.0 percent.
In July and August 2015 there was a notable decrease in the number of General Merchandise (GM) product listings. Drinkware (mugs and glasses) saw the largest number of delistings, equating to 6 percent of GM delistings, followed by Bath Towels, Sheets and Face Cloths, with 5.9 percent delisted.
New listings by category
Brand View has reviewed how many of the new listings, introduced between May 2015 and May 2016, remain listed in May 2016.
The largest number of new SKUs which were still listed were General Merchandise products, with 38.4 percent, while some 30.1 percent of new Grocery listings remained.
The majority of new SKUs were branded products – Own Label products only accounted for 0.8 percent of new listings.
New listings by sub-category
The chart shows the top 15 Brand View sub-categories that had the most new listings, still listed in May 2016.
Six of the top 15 were General Merchandise sub-categories and four of the top 15 were Health & Beauty sub-categories.
Women’s Underwear, Tights and Socks had the largest number of new listings in the past year. Some 87.5 percent of the total number of listings in this category on 31 May 2016 had been introduced in the past year – the second greatest percentage of any sub-category.
Construction Toys had the greatest percentage of new listings, as a percentage of the total number of listings, with 89.9 percent of its range newly listed in the past year.
Company prospects and strategy
Following its continued success and profit increase, it is likely that Ocado’s growth strategy will continue to differ from its bricks and clicks rivals.
Ocado’s 2015 Annual Report explained its strategy of increasing its range of products offered to consumers: “We have continued to broaden our product range across different price points, providing customers with a wide choice of products suitable for their respective spending patterns and taste. Our operating model and facilities allow us to expand range relatively easily with limited stockholding exposure.”
Although Ocado has felt ‘absolutely no impact’ since AmazonFresh UK launch, in time it may impact on Ocado’s strategy.
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