Home » Business

Ocado Retail Outlines Challenges, UK Employment Far Exceeds Expectations

Published on
  • Ocado Group PLC (LON:OCDO) sees record Christmas, but challenges persist as volumes fall
  • Fortnum & Mason profits more than double to £6.1m as domestic in-store shoppers come out in force
  • UK employment beats forecasts – number of people in work rises 27,000 in three months to November
  • Brent crude trades at $84.50 a barrel, breaks winning streak

Ocado’s Record Christmas

Ocado has seen a record Christmas, helped along by the increasingly popular slate of products available from partner M&S. There has been a theme in the latest festive season of consumers splashing out more than expected, despite economic turmoil and a cost-of-living crisis.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2022 hedge fund letters, conferences and more


This is certainly something that Ocado has echoed, with a 12.9% rise in active customers to 940,000, despite the fact Ocado groceries are at the higher end of the cost spectrum in the UK. Before any champagne can be popped though, it’s important to understand that the strong performance masks more troubling trends.

Customers are increasingly swapping to lower-price products and the number of items bought per-shop has fallen. All in that’s making margin progression more difficult. It’s true that Ocado’s overall price inflation was behind other grocers, which some will argue helped entice and retain customers.

The alternative way to look at that is to say Ocado can’t increase prices as far as its nearest rivals, because it’s already on the expensive side, giving it a smaller lever to pull when inflation spikes.

Away from digital shopping experience is luxury name, and royal favourite, Fortnum & Mason. In the 52 weeks to July 10, profits were £6.1m, up from £2.7m, as domestic customers flocked back to physical shopping. There’s also been a significant increase in online shopping, which shows Fortnum’s high-end and carefully curated aesthetic does in fact translate in the digital world.

The sheer success of the latest numbers is down to physical shops though, and suggests strongly that high net worth customers and tourists are proving to be resilient sources of income.

UK’s Economic Health

The number of people in work in the UK rose by 27,000 in the three months to November, which was markedly better than expected. Expectations were for a 5,000 increase. Interestingly, the number of full-time self-employed workers declined, which could be seen as an effort from people to secure more stable employment as the economic horizon darkens.


Overall, the numbers are just the latest to show that the UK’s economic health is holding up better than expected, but there are still plenty of vital signs that need monitoring.  

Brent crude is trading at over $84 a barrel, but this still marks a break in the upwards march seen in recent trading. There are increased recessionary fears which are winning the battle for market sentiment. The World Economic Forum, World Bank and major US companies have raised concerns about the global outlook.

At the same time, China’s latest GDP shows the economy grew by more than expected, rising 2.9% in the fourth quarter, against 1.8% expected, which will have boosted demand predictions, which may have stemmed some of the oil price decline.

Article by Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown