Waitrose maintains momentum as Ocado rolls out new saving pass

Interim results for the half year ending 30 July 2011 showed that Waitrose had increased its market share by 0.2% to 4.1%, attracting around 300,000 more customers each week. Gross sales were up £209.7m, or 8.7% to £2.63bn, with like-for-like sales on food up 4%. However operating profits were down 13.8%, to £110.2m, a fall of £17.6m, which the company attributed to planned investment in customer offer, service, efficiency and future growth.

A well as increasing footfall across stores, a new technology platform launched in March saw a 26.8% increase in sales, which was promoted nationwide. The retailer was also able to capitalise on the end of its non-competition pact with Ocado within the M25 area. With greater volumes in London anticipated, it is planning to open a fulfilment center in Acton this autumn, as well as a further 12 convenience branches by the end of the year.

Chairman Charlie Mayfield said: “Trading conditions are set to remain challenging through the rest of this year and into 2012. There are huge changes taking place in the way people shop as a result of technology reaching every part of our lives, and there is an ever-greater demand for convenience and value. We are not simply waiting for the recovery, but instead we have increased the pace of investment and innovation across the partnership, putting us in the best possible position to seize the opportunity created by a rapidly changing retail environment. Our momentum is strong and I am confident we will build on that in the second half.”

Meanwhile, online retail rival Ocado has announced a new loyalty scheme to distinguish it from its competitors. It is rolling out the ‘Ocado Saving Pass’, which will offer discounts of at least 10% to customers who join the scheme for a small annual fee. The company already has the Ocado delivery pass scheme, where customers receive free deliveries in return for a subscription fee. It now accounts for over half of its total customers.

The company returned strong 3Q results, despite capacity limitations on its Hatfield customer fulfilment centre, with gross sales increasing 19.5% to £444.6m for the 36 weeks to 7 August 2011, compared to £372.2m in the same period last year. Average orders per week for the 12 weeks to 7 August 2011 up 16.9% to 110,945, however, the average customer order has decreased marginally compared to the same period last year.

The retailer identified the constraints in its logistics, but said that work undertaken to improve the facility over the last quarter would allow around 1400,000 orders a week by the end of the fourth quarter. It is currently building a second customer fulfilment centre in Warwickshire.

Chief executive officer Tim Steiner said: “In spite of the tough economic environment, our sales are growing substantially and we remain focused on improving range, value and service for our customers. We are continuing to expand the capacity of our first fulfilment centre in Hatfield, with significant progress made over the summer months. While conducting these works, we have invested additional resources in improving our key customer performance metrics and we are pleased that these efforts are paying off.”

Ocado’s chief financial officer Andrew Bracey said: ““At 19.5% our year to date sales growth has remained strong despite the deteriorating consumer climate in the UK. With the enhancements to CFC1 that are being introduced, we will target an increased rate of sales in the 4th quarter. This does require us to be resilient to any further slowdown in consumer spending, which may affect Ocado.”

>Discounters continue to grow market share

>Ocado to open new Oxford distrubution depot

>Waitrose to open 20 smaller stores

>Waitrose plans expansion

>Ocado reports profits as it partners with French brand

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