Ocado has drawn up plans to launch ‘good, better, best’ tiering across its fast-growing own-label range.
The range has grown from 450 lines to 639 following a redesign last spring, and weekly sales have leapt 58% year-on-year to £1.6m.
Own label now accounts for 10% of Ocado’s sales and is expected to reach sales of £100m next year.
In the next phase of development, Ocado head of own label Alison Rhodes told The Grocer it planned to introduce more own-label tiers. It has already launched 24 premium own-label products under an Ocado Exclusive sub-brand, including lamb chops, exotic mushrooms and Parmesan cheese.
Next year, Rhodes said Ocado would ramp up the Exclusive range further and expand the number of its organic own-label products, grouping them under a distinct Ocado Organic livery. It will then launch a value tier called Ocado Simple in 2015.
By expanding the own-label range, Rhodes said Ocado was looking to fill gaps in the Waitrose range and give shoppers more reasons to shop with it.
“It’s intended to be complementary and incremental to Waitrose own label,” Rhodes said.
“We are looking at what is out there in the market and introducing products that Waitrose doesn’t sell. We think we can broaden our appeal with a wide and competitively priced own-label range. It’s a really exciting journey to be on because we have the opportunity to create something from scratch.”
Ocado focused on produce and protein in the first phase of the development of its own-label offer. But it has since expanded into new categories such as pizza, pasta and coffee.
In the summer, the online grocer moved into ready meals with an Indian range. Traditional Italian and Chinese ranges are now under development.
It is also working on a non-food range of household and kitchen items, such as washing powder and tin foil.
“There are still many categories to develop further and expand into. We can do a lot more fresh, chilled, prepared meals and grocery,” Rhodes said. “The exciting thing is that we are getting more and more suppliers coming to us and wanting to work with us.”
Earlier this year, the expiration of a clause in Ocado’s original sourcing agreement with Waitrose gave it more freedom to ramp up its own-label range and reduce the proportion of Waitrose lines in its own-label mix.
The contract stipulated that up to 25 May 2013, Ocado had to source 80% of its own-label groceries from Waitrose. But thereafter, the threshold reduced to 70%.