Member Info for Valueplay

These products do have little margin however they do help you retain customers who then buy a bigger basket of goods. Many of Tescos cheaper products are available for online delivery. The 39p loaf of bread is for example.

Ocado retails pricing is out of sync with this cost of living crisis...

Some of the traditional grocers are losing share, Sainsbury's, Waitrose. Ocado has ramped up capacity hugely this year and yet their market share is standing still. Previous projections had Ocado retails share marching ahead. It's only the huge capital expenditure in ramping up capacity that has kept them at the static market share. This added cost has meant they have made no profit...

Ocado do not have products at the lower end of the market. They simply do not stock them. Tesco is competing well on price re it's lower value range. There's a growing market for these goods and shoppers are seeking them out. It's a segment of the market that Ocado is completely missing out on...

You didn't make it clear what you were referring to Pokerchips. You said "they" that could have meant rapid grocers or Ocado.

Re traditional grocers and Ocado retail. More customers are using Ocado but are buying smaller baskets. Ocado retail has downgraded it's sales 3 times this year. Currently it's market share is static. I believe its sales will further fall and Ocados market share will remain static or drop in the months to come.

Discount retailers and traditional ones offering low prices (Tesco) are currently attracting customers away from Ocado (see latest Kantar figures) I see this trend continuing unless Ocado Retail can reduce its prices...

They are taking traditional grocery market share also. We are focussing on Ocado though as this is an Ocado board.

I outlined right at the beginning of this conversation that rapid delivery companies are a threat to traditional grocers as well as Ocado..

"Many of those companies will fall away. Some rapid delivery grocers though will evolve their business model/ take over others and emerge as strong competitors to Ocado and the traditional grocers..."

Ocado retail predates the UK rapid grocery delivery companies. Therefore it is conventional to say Ocado retails established market share of many years standing that is being eaten into. They are in direct competition. Very interesting segment to monitor going forward..

Its all about how successful a company will be in the future. How much market share it will have in the years to come. The recently formed rapid grocery delivery companies eat into Ocados market share a little. However there are larger problems than this out there for Ocado. One of the biggest being the overall growth of online grocery. Forecasts were pointing to huge exponential growth a year ago. Now though that growth is stalling and Ocado is consequently chasing a slice of a smaller market.

Ocado retail exemplifies this issue. Booming previously, this year though 3 profit warnings. Currently unprofitable. Every chance of losses and further drops in sales to come ..

Both Ocado and the rapid delivery grocers have opportunities ahead. My point was responding to you bringing up the rapid grocery delivery companies. It is foolish to write off them off. Within that sector powerful players will emerge as consolidation takes place...

You offer no explanation as to how Ocado will evolve. Lots of potential partnerships, uses of technology available to rapid delivery companies. There is a demand for rapid delivery which can be serviced profitably in larger urban areas.

I have no short position. Just outlining the obvious nature re the issues at Ocado as I see it..

Many of those companies will fall away. Some rapid delivery grocers though will evolve their business model/ take over others and emerge as strong competitors to Ocado and the traditional grocers...

Daily shares traded re a listed company are predominantly a very small fraction of the issued shares. Day to day there can be market moves caused by shares being off loaded etc. However when looked over a period of months the true trend becomes clear.

Ocado is particularly vulnerable to current market conditions which are attacking the profitability/viability of its business model. Yes Ocado can absorb extra dry ice/ fuel costs etc but these issues point to big vulnerabilities within Ocado Solutions grocery delivery model...

Am merely pointing out that many firms fail due to market conditions only for their ideas to be commonplace in the future.

You point to share manipulation by bots as a reason the price has fallen. The reality is this share has fallen for so many obvious reasons...

Pokerchips, Agreed, the automated warehouse is not going away. However on the way to a success story many firms fail. You gave the Canary wharf example previously as something that was a success in the end but Canary wharf itself went bankrupt before it was a success.

This same pattern is occurring here at Ocado. Conditions are hugely against Ocado. They need far more capital than they had previously factored in. Overseas grocers I believe are focussing on the huge challenges in their core operations. The lack of new contracts underlines this.

The Ocado business model relies on the assumption that online grocery shopping will continue its great growth. Currently growth is stalling and this causes huge issues for the company...

Buy some Carrington, let us know how you get on..

Dry ice has risen 3000% in cost in a year. It is just one of the many factors though. Ocado partners aren't reducing their CFCs as they are already in contracts to build the agreed amount of them. What we are looking out for is any Ocado solutions overseas customer announcing they are ordering extra CFCs, above those they initially agreed to. Kroger were announcing a flurry of new CFCs but that flow looks to have slowed.

Ocado retail, the shop window for Ocados technology is not gaining market share or making any profits currently. 3 profit warnings for Ocado retail so far this year. Good chances of another to come.

No new tech contracts since the new Ocado tech launch.

Lots more issues than I've described above. The Ocado share price still doesn't look attractive imo.

Aldi and Tesco sell more expensive bread that match the quality of Ocado bread. Ocado though do not even offer any products at the lowest Tesco Aldi price range. This is a key area where they are missing out sales. Customers are keen for an average quality product at the lowest price. Aldi and Lidl sales are booming off the back of selling these products. Customers are currently laser focussed on price and are, as Ocado admitted in their last trading statement, trading down, buying cheaper quality goods...

Aldi bread is priced at 39p also. As can be seen by the latest Kantar supermarket figures consumers are flocking to discount grocers for these sort of keenly priced products...

From Ocado retails last trading statement

"Notwithstanding positive customer growth, the accelerating trading down and smaller baskets, particularly over the last few weeks, mean that we now expect to see a small sales decline in FY22 and close to break-even EBITDA"

Traditional grocers have a lower cost base. Customers have shown in this cost of living crisis that they will happily visit supermarkets in exchange for accessing cheaper goods. For example an 800g white loaf of bread is 39p in Tesco compared to 70p at Ocado. The extra fuel costs of Ocados delivery model are significant.

High gas prices will fluctuate but are likely to remain relatively high for a very extended period.

Grocers such as Tesco have a huge supply chain advantage over Ocado retail. They can source more product at cheaper prices due to their vast buying power versus Ocado retail. Tech may well reduce Ocados costs greatly in the future. However I believe for many, many years Ocado retail will not be a cheap online grocer.

Currently additional issues such as the enormous cost of dry ice and high fuel costs mean Ocado Retail prices will need to be higher for the foreseeable future. Unless they simply decide to reduce prices and incur losses to hold onto market share.

With Ocado retail not making a profit currently, and no new international grocers signing up to Ocados tech, Ocado will find it hard to maintain their full on investment in the best technology if current market conditions persist as I believe they will do for the foreseeable...

Absolutely. Let's see how it all unfolds....

Time will tell Treacle,

I very much disagree with your views. Inflation will stay stubbornly high and interest rates will rise further in my view. Also consumer confidence will continue to fall in the coming months. Ocado is very exposed to these continuing trends.

Best of luck to you though.

"Ocado Retail is having to move more into the Value end with their offer, to appear similar to the competition, rather than previously being more distinguishable with its offer"

Ocado Retail is still very distinct from others. They have a 58,000+ product range which is far greater than any of its competitors. Far more product depth across the board. They developed a value range many months ago. In this cost of living crisis consumers are laser focussed on price and Ocado is expensive relative to the competition. Many are leaving Ocado retail and shopping elsewhere. Many Ocado customers are moving towards buying cheaper items and are buying a smaller basket of goods at Ocado.

All of this reduces profitability greatly at Ocado retail as the Ocado retail model is aimed at and built for supplying large £100+ shopping baskets.

2 of Ocados retails key management team have left of their own accord recently without successors having been in place. I believe they had seen how profits are set to dwindle further in the coming months and decided to seek out a better opportunity for themselves...

Ocado retail is the showcase for Ocados technology that it sells to grocers around the world. The showcase currently is not growing market share and is not profitable. Personally I see this deteriorating further in the coming months as Ocado retail market share starts to fall and Ocado retail turns loss making...