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September 30, 2020updated 05 Nov 2021 11:26am

Ocado overtakes Tesco as most valuable retailer on the UK stock market

Online grocer Ocado has overtaken Tesco in terms of its stock market value, now valued at £2.17bn compared to Tesco’s £2.11bn.

By Jessica Paige

Online grocer Ocado has overtaken Tesco in terms of its stock market value, now valued at £2.17bn compared to Tesco’s £2.11bn. Ocado is now worth more than double the combined value of Morrisons and Sainsbury’s.

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Analysts have attributed Ocado’s recent success to an increased demand for online food shopping amid the Covid-19 coronavirus pandemic as well as Ocado’s recent partnership with Marks & Spencer (M&S).

The takeover has been marked by many in the industry as “surprising”, as Tesco controls roughly 27% of the UK grocery market while Ocado sells only 1.7% of the UK’s groceries.

However, Ocado has also been popular with investors after it recently launched tech business Ocado Solutions, which sells services to foreign countries that will enable them to offer a better grocery experience.

From “charity” case to most valuable retailer

Ocado was launched 20 years ago and struggled to turn a profit in its early days. A former Tesco chief executive had even described Ocado as a “charity” because of the amount of losses it had accumulated.

The share value of Ocado began to rise in 2017, after it severed partnerships with US-based group Kroger, France-based Casino, and Sweden-based ICA Group amongst other international companies.

Earlier in 2020, at the end of February, A share in Ocado was worth around 1,035p. However, the retailer’s share price soon began to climb at a sharp rate, with the company’s shares now being valued at roughly 2,895p.

Ocado holds promise, but “whether it can deliver is quite another matter”

Markets.com chief market analyst Neil Wilson told the BBC that Ocado’s value has been surmised from yet-to-surface overseas deals.

Wilson said: “Ocado holds enormous promise but whether it can deliver is quite another matter, the cash burn remains and the payback from all these overseas deals is taking a very long time.

“One of the reasons for Ocado’s valuation is the expected revenue from its overseas deals, but these ‘have been slow to materialise’.”

Free Whitepaper
img

What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.