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What are the opportunities for Ocado in clothing?

Online grocery firm Ocado has signalled it may be looking to clothing and homeware for future growth, building on its expertise in “moving things”.

Ocado currently sells Waitrose branded kid’s and baby clothing, women’s underwear and hosiery from Pretty Polly and men’s underwear from Farah, an add-on purchases to its core offer of groceries.

Last week Ocado’s chief executive Tim Steiner indicated the business was seeking to diversify into delivering other product categories, as sales rose 12% to £800m for the six months to 3 June, but the company made a pre-tax loss of £9m.

“We need to not just focus on what we have to do today, but also make sure we innovate for the future. There’s a big market in food, but we are also exploring other applications where our skills at moving things are just as useful as they are in the food market.”

Clothing spend via grocers is forecast to experience growth of 11.5% over the next five years to 2023, adding an additional £508m to the clothing market, analyst GlobalData reports.

Analysts told Drapers that, rather than a comprehensive move into the fashion industry, Ocado is best positioned to attract new partnerships in clothing and homeware using its high-tech warehouses, which use robotics to pick orders.

“As growth in the clothing sector continues to be driven online, the online player already holds an advantage owing to its enhanced website and mobile-app functionalities,” said senior retail analyst at GlobalData Mamequa Boafa.

Boafa suggests Ocado should bolster its clothing offer via an own brand range or branded collaborations with similarly positioned brands such as Boden, Joules and Crew Clothing.

Retail analyst Nick Bubb doubts Ocado will become a clothing retailer in its own right: “I can see Ocado selling pet care, barbecue equipment and personal care, but clothing? Maybe a few socks and T-shirts, but anything more would be a bridge too far.”

Independent analyst Richard Hyman agreed: “I don’t this as presaging Ocado [transforming into a standalone] clothing retailer. Aside from anything else, we already have far too many – look at the pressures on House of Fraser, Debenhams, and Marks & Spencer …”

However, he added the etailer could capitalise on the growing demand for convenience from shoppers: “Ocado has changed City perceptions from it being a retailer to it being a tech company. Given its skillset, it could really deliver anything for anyone.”

 

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