Below is the Nocado Campaign’s press release response to Ocado’s financial results which were reported today.
Backlash against Ocado’s first inner city hub threatens brand and revenue
A growing consumer backlash against Ocado’s first planned inner city hub (in Islington) is threatening to undermine its carefully honed “green” image and could lead to millions of pounds in lost revenue, warns the NOcado campaign group.
The hub, under construction in Tufnell Park, Islington, is facing a determined campaign as it is located right next to a local primary school and nursery. The campaign is highlighting the threat of air pollution and safety to the young children. It is also warning of the huge negative impact the hub could have on retailers across Islington due to plans for a new 24 hour Zoom service. More broadly it is challenging Ocado’s claims to be a green retailer when its business model depends on polluting diesel vehicles and plans for up to 50 more hubs with negative community impacts.
A burgeoning boycott campaign is already losing Ocado thousands of pounds of revenue within a few weeks as horrified customers turn their backs on the brand. NOcado estimates that Ocado is losing around £5,000 of revenue for every new boycotter (see box below). Given there are at least 13,000 Ocado customers in the Islington/North London area, NOcado are running a high profile campaign to encourage people to switch to more ethical providers.
However, the ambition of the campaign is to have a national impact, raising the question of whether Ocado’s business model, new hubs and new 24 hour Zoom delivery service targeted at taking business from local corner shops and convenience stores is really sustainable, given the negative social and environmental impact and the backlash from local communities.
Impact of boycott: financial and reputational risk could escalate for Ocado
- Ocado’s latest financial results (December 2019) reveal that an average order size is: £104.90.
- Based on an average loyal customer spending £104.90 on a weekly shop for 45 weeks this equates to £4720 (desk calculation based on hypothesis of likely annual order regularlity from customer).
- This is a conservative estimate as Ocado customers with families will be higher spends ie £150-200 (based on limited research among existing Ocado boycotters).
- To date the campaign has already gathered 4,000 pledges of support.
- There are estimated to be around 13,000 Ocado customers in the Islington/North London area.
- On a worse case scenario for Ocado if every one of these 13,000 Ocado customers left and they each had an annual spend of £4720 that could equate to significant amounts of lost revenue (note: this is an estimate and not a financial prediction).
- Awareness of the campaign could lead to a much larger reputational and brand impact as it has been featured in several national newspapers and media outlets including The Times, Sunday Telegraph, and Evening Standard.
The local primary school and Islington Council have also been demanding much greater transparency on environmental and social impacts from Ocado at a recent public meeting with senior Ocado representatives attended by hundreds of enraged local residents.
Natasha Cox, one of the founders of NOcado commented: “What our campaign is exposing is that there is a clash between Ocado’s sustainability commitments and the reality of the way they do business. Many Ocado customers would not choose them if they realised that beneath this greenwash, there is a harsher truth: they will put a polluting hub next to a large primary school regardless of the impact on children’s health and well-being. To make more money they are willing to harm communities and undermine the viability of local high streets with their new Zoom service.”
Andrew Grieve, senior air quality analyst, King’s College London: “The evidence linking air pollution and children’s health is overwhelming. Childhood is a particularly vulnerable time and evidence shows harm to heart, lungs, immune system and even development of the brain and intelligence which last into adulthood.
Given what we know, locating a busy depot with hundreds of vehicle movements metres from a primary school presents a serious threat to the health of these young children now and into the future.”
One local family who have switched from Ocado to Waitrose commented: “We are horrified by Ocado’s attempts to hide this huge development by not putting in a full planning application hiding behind weaker planning rules for industrial estates and failing to provide clear environmental and social impact assessments. The damage to the local environment and retailers in North London could be devastating, while the profits of this new hub, will be relocated back to their distant HQ. I used to spend £150 a week on my family shop, £7,200 a year, so at least I know with my boycott that I am hitting Ocado where it hurts.”