Ocado slips as high-speed grocery delivery demand faces scrutiny

Quick delivery services have been thrown back into the spotlight following the rollout of same-day grocery delivery services from Morrisons, whom Ocado signed a 25-year distribution agreement with in 2013, and Amazon, who Morrisons agreed to supply with groceries in 2016.

But the report from The Grocer said these speedy operations are often very low value and consumers are willing to pay a fee comprising just a small portion of sector spend.

Mintel data states that a quarter of shoppers are still reluctant and say they would not pay anything for same-day delivery, while only 19% would be willing to pay over £5.

Meanwhile, data from Kantar shows that 90% grocery online purchases are for a 'main shop', while the need for more spontaneous purchases like a missing ingredient or necessity item are far more likely to result in a trip to a brick-and-mortar store.

The report also cited Tesco's shortlived Tesco Now, a one-hour grocery delivery service for Londoners, as further evidence that the demand for high-speed grocery delivery services such as those operated by Ocado may not be sufficient.

Against that backdrop, the FTSE 100-traded company also confirmed that it has sold its Fabled by Marie Clare for a minimum guaranteed payment of £3m after switching its focus to an online food joint venture with Marks & Spencer that was launched in February.

Online fashion retailer Fabled.com sells products from high end beauty brands such as Shiseido, La Mer, Tom Ford, Estee Lauder, Lancome and Bobbi Brown.

Ocado's shares were 5.12% lower at 1,093.00, while Next's shares were down 1.50% at 5,528.00p at 1601 BST.