One grocery rival says: “They’re already at capacity, how are they going to deliver all these new orders?”
Investors may not care, however. Most of the excitement surrounding Ocado is focused on its prospects as a technology provider, able to sell the same set of robotic warehouses and website systems to multiple international supermarkets.
“The most transactional and profitable part of the Ocado Group is Ocado Retail, to which the market seems to ascribe the least value. Where the value sits is in Ocado Solutions,” says Clive Black, an analyst at broker Shore Capital. Steiner’s inability to sell his technology to other companies was ridiculed for years. Sir Terry Leahy, the former boss of Tesco, even referred to the online grocer as a “charity”.
Ocado was vindicated three years ago when he announced a tie-up with France’s Casino chain.
It has since sold 54 automated depots for seven supermarkets overseas, including Kroger in America and ICA in Sweden, to help them compete with the likes of Amazon. And since coronavirus, to capitalise on the boom in online grocery too.
The fee agreements are cloaked in secrecy, but in its pitch to investors last month Ocado claimed that the market could be worth up to £26.3bn.
Steiner, who inherited some of his entrepreneurial flair from his mother, Linda, founder of a beauty brand, still divides opinion, but his doubters continue to be confounded.
“Ocado is a capital-intensive business,” says Black.
“It hasn’t made any money for the best part of 20 years, is not expected to make any [significant] money, and I wouldn’t be surprised if they just announced more fundraisings in the future, but it is ascribed an enormous valuation by the market and, you know, the market doesn’t lie. One has to accept that, and congratulate Ocado, for what they’ve done. It is a remarkable and distinctive story.”