It's Time To Admit That Ocado Will Do Real Damage To Britain's Lousy Supermarkets
Yet at Ocado, the small, Amazon-like online grocery delivery company, they're run off their feet:
- Through Nov. 30, gross sales were up 18.6% to £332 million.
- The company is hiring 1,000 new workers - not just for Christmas but as permanent positions.
When I tried to order an Ocado delivery right before Christmas, almost all the slots were booked. Those that remained had a surge pricing charge of about £6. When my delivery came, I asked the driver how busy he was. He told me that people start booking Christmas shopping delivery slots in July. Usually, they hold down their slot with an expensive item like a bottle of champagne, and then add to their order nearer Christmas Eve. Pre-Xmas deliveries are almost all booked by October, I was told.
It begs the question: Are the UK's premium supermarket brands imploding because customers are moving to Ocado?
Yes and no. Some customers are moving to Ocado, obviously. That's why Ocado sales are going up. But Ocado's sales are still too small to be stealing the kind of share that Sainsbury's and Tesco are losing. Sainsbury's does about £26 billion in sales annually.
Yet you would have to be blind to disregard the underlying dynamic: Tesco et al aren't collapsing because people are buying less food. They're sinking because they're trying to sell things people don't want, at the wrong price.
At Ocado, on the other hand, it's like the opposite of being in a lousy supermarket. Its search-based mobile app helps you find exactly what you want instantly. The little shopping cart app fills your basket automatically. It even gives you discounts if Ocado can't match a Tesco price. And there are some nice surprises - if Ocado runs out of the thing you ordered, it just slips in something similar. Normally, that would be a problem but Ocado offers to credit you next time if you didn't like it. Frankly, I liked it - they solved a problem before I even know I had it. They didn't have my beer, so they gave me different beer instead. I still got beer!
Best of all, a nice man (or woman) drives the stuff to your door, drops it off in your kitchen and calls you "sir." He even recycles the bags for you. This does not happen at Tesco. The Ocado experience is a pleasure. The Tesco/Sainsbury experience is like being stuck in that Sartre play that illustrates "hell is other people."
Now apply this to the long term: Ocado, over time, is going to do real damage to the major supermarket brands. It will look like what Amazon did to bookstores, and what iTunes has done to record stores. This is just the beginning.