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You can’t bet against Ocado, in the same way it used to be foolish to bet against Goldman Sachs.
Ocado, which was set up by Goldman Sachs’ alumni as an online grocer in 2000, is one of the obvious winners in this awful coronavirus crisis. Its bot-manned “customer fulfilment centres” and vans delivering fresh food and staples are operating at full capacity.
Duncan Tatton-Brown, finance chief, said on Thursday it had more orders on one day this week than it normally expects in seven. Basket sizes have ballooned. Sales have doubled in the quarter to March. The business is running at full capacity. The shares — once among the most shorted in the UK market — have risen a quarter in a month.
Few other retailers can boast that the volume of orders in recent days has threatened to overload it. Ocado’s systems thought the spectacular rise was a software attack. But now the group is denying all access to its Ocado Retail website to give it time to get on top of the orders queueing up for delivery.
Ocado says it also needs a few days to catch a breath and find a way of rationing goods and prioritising the needs of those most vulnerable to Covid-19. Apparently, writing a code to prevent customers from virtual stockpiling is slow — much harder than broadcasting the message by memos or over the tannoy.
Rival Wm Morrison’s response to Covid-19 was more straightforward. On Wednesday it said it had expanded its online delivery capacity, would guarantee staff pay and committed to immediate payments to its small suppliers. The same day J Sainsbury’s outgoing chief Mike Coupe wrote a personalised email to “Dear Kate”. The gist was Sainsbury meat counters will close, more products will be rationed but the chain is broadening its “click & collect” service from next week.
Ocado could take a cue from these old-fashioned grocers with old-fashioned communication skills. Any shop, high street or online, that shuts down transmits uncertainty about the future. It’s potentially worse for an online retailer, sans stores, that prides itself on its logistical and technical prowess.
The group casts itself as four-parts technology and one-part retailer, now a joint venture with Marks and Spencer. The so-called solutions arm provides the back-office boffinry, which has tripped up over order volumes, to the customer-facing UK retailing arm, which is floundering. And by pulling down the shutters on its webshop, Ocado risks alienating new customers for far longer than just the four days that its site is closed.
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