Iceland is embarking on a major expansion in its food delivery business, the Standard can reveal today, as the low-cost supermarket gears up for a surge in demand in the run up to Easter.
The Deeside-based business is poised to recruit an extra 250 delivery drivers as it seeks to claw market share from rivals by attracting customers on squeezed incomes with free delivery, for which Ocado charges as much as £7.
Helen Tindle, HR Director at Iceland Foods & The Food Warehouse, told the Standard: "We are currently recruiting for over 250 home delivery driver roles across Iceland and The Food Warehouse, as we prepare for the busy Easter trading period.”
It comes as rival Ocado today posted another £400 million loss for the year to December 2023 as consumers shrunk their shopping baskets in the face of cost-of-living pressures.
Revenue for the year was up 9.9% to £2.8 billion for the year to December 2023, led by a 44% jump in turnover in its technology consulting arm. But retail revenue was more muted, up 7%, a relatively modest gain given grocery inflation was up above 10% last year. Group losses of £403 million were smaller than the £501 million loss posted the previous year.
The firm said it saw a “reduction in items per shopping basket as consumers responded to the impact of high inflation on their cost of living.”
Average basket value increased 2.7% during the year, Ocado said, with the basket value increase was driven by average selling price rises 7.9%, offset by a smaller number of items per basket which declined by 4.5% to 44 items.
The firm added: “Revenue growth is likely to be impacted by lower growth in [average selling prices] as we invest in value and as food price inflation continues to subside.”
Iceland Executive Chairman Richard Walker told the Rest is Money podcast last month: “It’s very difficult to compete with someone who’s happy to make no money – speak to a bookseller trying to compete with Amazon.
“But now we’re in a really good place as a business to keep growing…we have massive online delivery business and we do more deliveries per week than Ocado now.”
Analysts Peel Hunt said a downgrade in Ocado’s profitability was expected in the coming year.
They said: “Having spoken to the company and done some back-of-the-envelope maths, we believe consensus EBITDA...could reduce from £160 million today to £110-115 million, a 30% downgrade.” Peel Hunt put this down to “continued issues at an online supermarket retailer that is heavily tied to macroeconomic conditions.”
