Demand soars for Ocado, but Waitrose set to muscle in

Online grocer Ocado is struggling to meet a boom in demand as it reaches beyond its traditional high-income customers.

The internet-only grocer yesterday posted a 24.7 per cent rise in gross sales during the 12 weeks to 20 February, but said it could have done more if not for constraints on its Hatfield distribution centre north of London.

Chief financial officer Andrew Bracey said the company had remained profitable in the first quarter, following its maiden quarterly finish in the black in the final three months of last year.

The company has opened a second depot in Bristol, while a second distribution spoke serving the London area is on course to open in May.

The company is preparing for increased competition from Waitrose, which is in the process of extending its direct delivery service in Ocado's heartland within the M25. Waitrose is due to launch its revamped website next week, offering many of the "personal touches" that have gained Ocado a loyal following.

Bracey said Ocado would not add own-brand products to its range in an attempt to go head-to-head with Waitrose. The company will continue filling in gaps in the Waitrose line.

Chief executive Tim Steiner, one of three former Goldman Sachs bankers that set up Ocado in 2000, said take-up of the service was encouraging. "More consumers are seeing the benefits of online grocery shopping and we are increasing capacity to meet this demand," he said.

Clive Black of Shore Capital said: "We sense many if not most Ocado shoppers use it to access Waitrose products. So, if one can go direct to Waitrose for such lines, why use Ocado?"