The retail industry has started moving at a fast pace in the year 2021 as many disruptive forces have merged after the Covid-19 pandemic. The Industry Has Gone Through Many Structural Changes As Journey Of The Customers Has Evolved Rapidly Based On The Seismic Shift That Has Started Taking Place towards online channel. The various aspects or retail trends that have been depicted in 2021 include changing face of the consumers, long-term influence of Covid-19, channel shift that has taken place to online, prioritising the digital aspects in journey of customers, changing role played by the stores, brands that connect with customers directly, raising the environmental, social and governance credentials, developing supply chains that are resilient in nature, managing the Brexit policies and updating the business models (Akpan, Soopramanien and Kwak 2021).
The increased importance of social distancing that has been depicted since March has further been able to increase usage of the online channels. The shifts in customers preferences have also led to a major transformation in the operations of retail organizations in the United Kingdom. The retailers have aimed at fast tracking the process of digital integration by the usage of innovation for developing ways that can leverage the existing stores for supporting online sales (Bbc.com, 2022). The report will be based on detailed analysis of the legal structure, purpose, scope and size on three different online only retail organizations. Various functions of one of the organizations will be discussed in the report in detail based on the interrelationships. The PESTEL framework will be used for examining the external macro factors that can have an influence on the decision-making and business objectives of the retail organization. SWOT framework will be implemented for explaining and exploring the internal strengths and the weaknesses of the selected retail firm. The interrelationships of the macro and micro factors will also be a major part of the analysis that will be made in the report.
The opportunities related to grocery shopping that are provided to customers in the current post-pandemic environment is considered to be quite limited due to the aspects like social distancing. The online supermarkets have started gaining major levels of popularity in the last two years after Covid-19 pandemic. The customers have been connected with the suppliers and the supermarket chains in various European countries with the help of convenient and safe grocery experiences that are being provided to them. Online only supermarket chains have gained major levels of importance in the digital age and after a huge push that was provided by the Covid-19 pandemic. The activities related to online grocery shopping have started evolving in a huge manner and has become a common alternative to the physical supermarket visits in the UK and in different parts of the world as well (Brooks et al. 2021).
In the last ten years number of the British individuals shopping their grocery online has increased hugely. Average value related to online sales of products has spiked during second part of the year 2020 after start of the pandemic. Physical stores were able to gain biggest part of the grocery shopping activities of customers based on different types of stores. However, the increased levels of connectivity have led to enhancement in the number of online shoppers in the United Kingdom. Further, the outbreak of coronavirus has been able to play a major role in increasing the revenues of online grocery stores in the United Kingdom as the online shopping options are considered to be safer in comparison to the physical stores (Crick and Crick 2020). In the year 2021, more than forty percent of the shoppers in the United Kingdom have also believed that they would wish to continue their grocery shopping from online websites even after the pandemic has ended. Many retailers in the United Kingdom have started catching up and are providing beverages, groceries and the meal kits include the other services and products through the online platforms (Cummins et al. 2020).
Ocado is a major online grocery shopping platform in the United Kingdom that offers a wide range of products to the customers that can be obtained by them from the comfort of their homes. Ocado had joined its forces with Marks & Spencer in the year 2020 for increasing the types of products that can be provided to the customers. The product portfolio of Ocado includes many grocery products of M&S and a wide range of the other high-quality brands and products. Ocado has aimed at making environmentally-friendly deliveries to the customers by using the green delivery related slots and the carbon dioxide emission levels of the vans have also been reduced by 33 percent from the year 2012 to 2018. Abel & Cole is another major online grocery delivery platform that has started gaining major importance and revenues from 2020 in the United Kingdom (Flynn et al. 2020).
The organization offers large number of grocery products that include fresh meat, chilled produce, pantry items and fish. The products that are delivered by Abel & Cole are organic in nature that mainly contain vegetable and fruit boxes. Other deli items like charcuterie, cheeses and the nibbles are also offered by the organization to customers in different parts of the United Kingdom. The traditional favourites of the customers in UK include gourmet mushrooms, sprouting carrots and the varieties of squash. Abel & Cole also aims at reduction of carbon footprint and ensures that the best quality products can be offered to the customers. Morrisons is another major online grocery retail platform that offers various types of products to the customers that can fulfil their daily requirements (Forbes.com, 2022). Morrisons has also proved to be a good choice for the families who have a fixed budget for purchasing grocery items every month. The organization aims at offering a wide variety of products to the customers that can be purchased by them from the comfort of their homes. The safety related to shopping activities is also increased in the post-pandemic environment and this will also have an impact on the recent retail trends that are depicted in the market (Ft.com, 2022).
Ocado Group is mainly a business that licenses the grocery technology and owns around 50 percent of Ocado.com that is owned by the UK based retailer Marks & Spencer. The organization also aims at licensing the technology of grocery fulfilment to the global retailers like Coles in Australia and Kroger in United States. Ocado Retail Limited or ORL is an online supermarket of British origin which has gained its position as the world’s biggest retailer of online grocery. Ocado was established in the year 2000 by Jason Gissing, Tom Steiner and Jonathan Faiman who were formerly merchant bankers with the Goldman Sachs. Michael Grade became the non-executive chairman of the organization in 2006 and its app was released in the year 2009. Ocado had launched an app for the voice assistant of Amazon Alexa in 2017 for enhancing the convenience of customers who order groceries from the company (Ocadogroup.com, 2022).
A deal related to Smart Platform was signed by Ocado in 2018 with Kroger that is a major US retail organization for building twenty Customer Fulfilment Centres or CFCs by using the automated technologies. Ocado provides various types of products that can fulfil the needs of customers and the organization also offers private brands that include magazines, flowers and toys. Ocado Technology is mainly a part of Ocado Group that aims at designing the technologies in-house and is not only limited to the apps, robots and the warehouses of the organization. The sales of Ocado had increased by around 20 percent during the Covid-19 crisis and the shift towards online shopping that had started taking place in different parts of the world including the United Kingdom (Hobbs 2020). The revenues of retail organizations improved by 19.8 percent to around £1.2 Billion within six months till the month of May. The organization was able to record positive growth after the month of May after easing of Covid-19 restrictions. The changing landscape for grocery industry is considered to be a major factor that has a huge impact on the profitability levels gained by Ocado Group and its position in the market as well. Ocado also included the products of Marks & Spencer in the month of September and the organization ended its partnership with a major organization like Waitrose (Ibisworld.com, 2022).
Figure 1 – Organizational chart of Ocado
Source – (Ocadogroup.com, 2022)
The organizational chart of Ocado Group consists of the key members of the organization include Tim Steiner who is the CEO, Luke Jensen who is the CEO of Ocado Solutions, Mark Richardson who is COO of Ocado, Stephen Daintith who is CFO of Ocado and Neill Abrams the Group General Counsel and Company Secretary. The key members who are a major part of the organizational chart of Ocado play a major role in managing different departments of the organization and its position in the industry as well (Kim 2020).
The Board at Ocado Group has provided major levels of importance to the good corporate governance and role that is played in providing support to the sustainability and ling-term success of the organization. The organization has been able to evolve from a retail business to the provider of platform technology based on development of the Ocado Smart Platform and Ocado Solutions. The committees and board of the organization is committed towards bringing success to Ocado Group during a pivotal time in the history of the company. The policies and the procedures that are implemented in Ocado Group have proved to be a major part of the organizational operations. The group aims at making the right decisions so that right things can be done and the business can be managed properly as well (Moran et al. 2020).
The policies of Ocado Group can cover various aspects of the organizational operations and control and high standards are also ensured for meeting the requirements of corporate governance and aligning with the strategy of the company. Online training has played a major role in ensuring that Ocado Group can automate its operations and can provide an online grocery platform to the customers in the United Kingdom. The organizational structure of Ocado group is based on the clear division of the duties, authority and control and the policy framework that can cover all the key areas. The progress of various departments of Ocado are monitored by the management, the Board and the Executive Directors of the organization (Naeem 2021). The information security on the online platform of Ocado Group is managed by the Information Security Committee of the organization.
The data protection related team and Personal Data Steering Committee of Ocado Group aims at managing the governance of data privacy. The function related to Internal Audit provides assurance on the controls and key programmes. The treasury policy is mainly overseen by the Treasury Committee of Ocado Group. The treasury department aims at reducing the financial risks that can be faced by Ocado Group. The food and product technology department of Ocado Group aims at monitoring and designing the compliance with processes of Ocado for handling and procurement of the foods and the other goods for resale. The various internal departments of Ocado Group aim at combining their activities together for providing the best quality services to the customers (Nakat and Bou-Mitri 2021). The aims and objectives that have been set by the organization can be fulfilled easily with the support that is mainly provided by the activities performed by various departments.
The multidivisional or divisional organizational structure is used by Ocado Group for the purpose of dividing and managing the business units. The leadership teams in Ocado Group are mainly formed based on the products and services that are being offered to the customers. Ocado Group consist of various business units that include Ocado Retail, Ocado Technology and Ocado.com. The various units of the organization are mainly managed by different leadership teams that are formed based on the divisional organizational structure. The leaders of various business units or departments are mainly responsible for managing the company. The units of the organization are mainly managed by the leaders and the strategies that are developed by them (Nicola et al. 2020). The leaders are able to playa major role in ensuring that the organizational objectives are fulfilled and the goals are achieved as well.
Technology and automation have been a major aspect related to the business operations of Ocado in the retail industry. The partnerships that are formed by Ocado are also managed effectively by the leaders of various business units of the organization. Ocado re-imagined a large series of the changes and innovations related to technology for the purpose of powering the Ocado Smart Platform or OSP. The smart platform mainly includes the world’s most efficient and lightest bot related to grocery fulfilment that is an automation for the demanding jobs that need to be completed by the employees (Oecd.org, 2022).
The external or macro factors in the industry can have huge positive or negative influences on the business objectives and decisions that are made by an organization like Ocado that operates in the highly competitive grocery retail industry of the United Kingdom. The factors influencing Ocado Group can be examined in the following manner,
Political factors – The political challenges in supermarket and grocery industry can influence the operations of organizations in the industry. The new regulations related to Brexit have influence the costs faced by the grocery organizations and have also increased delays of delivery of goods in different parts of the United Kingdom. The covid-19 pandemic and the lockdowns that have been implemented in different parts of the country have affected the supply chains of various firms (Pantano et al. 2020).
Economic factors – The individuals who have high disposable incomes and effective living standards can purchase larger number of grocery items in comparison to the people who have low-income levels. The covid-19 pandemic has however affected the sales and revenue levels of the retail organizations that are operating in the United Kingdom. Lockdowns in various regions in the UK were able to increase the levels of panic buying activities that were performed by the individuals. The huge purchases being made by all the individuals had an impact on the profit margins that are gained by the organizations. The profit margins and sales growth of Ocado Group has been influenced positively by the covid-19 pandemic (Panzone, Larcom and She 2021).
Social factors – Online shopping related behaviours were effectively developed by the customers in the United Kingdom due to increased usage of internet. However, the covid-19 pandemic situation and importance that was being provided to social distancing activities have further increased the importance of online shopping activities of the customers. The shift in demands of the consumer shopping habits is considered to be a major factor that has an impact on the strategies that are implemented by the retail organizations. The retail organizations operating in the United Kingdom have also started enhancing the online shopping activities in the post-pandemic situation (Sayyida et al. 2021).
Technological factors – Technology has been able to change the ways by which supermarkets are operating in the grocery retail industry. The implementation of modern technologies has also influenced the choices of customers in the United Kingdom and the operations of retail organizations as well. The online grocery shopping platform that is provided by Ocado can be extensively used by the customers for fulfilling their shopping needs from the comfort of their homes (Sharma and Jhamb 2020).
Environmental factors – The retail operations have a huge influence on the environment as packaging of the products can lead to major environmental issues like overcrowded landfills and increased pollution levels. The usage of online shopping and technologies can thereby play a major role in ensuring that the retail organizations can maintain their profit margins and reduce their impact on the environment. The online operations of Ocado will also prove to be environment-friendly in nature and this can also provide a sustainable competitive advantage to the organization (Shrestha et al. 2020).
Legal factors – The regulations and rules that are implemented by retail firms in the industry can influence the strategies developed by the retail firms in the United Kingdom. The payment of minimum wages to the employees is considered to be important for the organization to ensure that it can maintain the regulations that are a part of the retail business environment (Statista.com, 2022).
The internal strengths and weaknesses of Ocado can be examined by using the SWOT analysis framework in the following way,
The macro and micro factors of the environment can influence the operations of Ocado and its growth in the future. The organization will be able to maintain its competitive advantage in the grocery retail industry with the support that is mainly provided by the changes taking place in the external or macro environment. The recent covid-19 pandemic has been able to affect the global supply chains and the operations of various organizations operating in the respective industries. The PESTEL factors including political, economic, social, technological, environmental and legal aspects can influence the profit margins of Ocado Group. The strengths and weaknesses that have been gained by Ocado Group are influenced by the macro factors that are a part of the environment (Valaskova, Durana and Adamko 2021). Moreover, the choices of customers have been influenced in a huge manner by the pandemic situation and changes that have taken place in choice of the customers.
The shift of consumer choices towards online grocery shopping has been considered as a major factor that has influenced the strengths and weaknesses of Ocado Group. The strength of Ocado Group is related to providing automation and technologies to the grocery retail shopping activities. The increased demands of customers during and after the pandemic can be used by Ocado Group to increase its profit margins and future growth in the industry. On the other hand, the weaknesses related to credit and debt facilities has an impact on the production facilities and the modern technologies that are implemented by the organization. Ocado can use the financial profits gained due to growth during the pandemic in order to improve the technologies that are used for offering its products to the customers in the United Kingdom (Cummins et al. 2020).
Conclusion
The report can be concluded by stating that the changes that have taken in UK grocery retail industry after the global Covid-19 pandemic are able to influence the operations of various online-only retail organizations positively. The major recommendations that can be provided to an organization like Ocado Group related to improvement of its growth in the future is related to enhancement of its online platform. The user-friendly nature of the online platform needs to be increased so that customers belonging to all age groups can use the website to order grocery products on a regular basis. The future growth of Ocado Group can be managed properly by ensuring that the organization can communicate properly with the customers and can provide its products to large groups of customers in the United Kingdom. The increased usage of internet and online shopping platforms can play a major role in ensuring that Ocado Group can maintain its position in the industry and can enhance its profitability levels in the future as well.
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