Ocado Group PLC (LON:OCDO) is “primed to capitalise” amid a “dramatic surge” in demand for online groceries, analysts at Berenberg said.
The coronavirus outbreak has prompted consumers to stockpile ahead of potential weeks of isolation, turning to online shopping as a result.
READ: Ocado reports “exceptionally high demand” as coronavirus fears mount
However, analysts noted many customers were disappointed by high product substitutions or missing items in deliveries from store-based grocers, turning to Ocado instead.
The online supermarket’s stock has outperformed the FTSE 100 by more than 40% since the first case of coronavirus was reported in Europe.
According to Berenberg, the unprecedented situation highlights “the inadequacy of manual picking operations, which are unable to scale efficiently and have disrupted in-store shopping”.
Meanwhile, Wm Morrison Supermarkets PLC (LON:MRW) posted on Tuesday a 5% rise in year-on-year sales while announcing plans to cope with the soaring demand coming over the next week.
READ: Wm Morrison sales jump as shoppers stock up ahead of coronavirus lock down
Despite the challenging supply chain constraints, some analysts believe long-standing supermarkets could learn a lesson for the future.
“The online proposition for grocery deliveries is appealing particularly in times like these so it makes sense to focus efforts on this segment,” said Joe Healey, analyst at the Share Centre.
However, some noted competition may get even more ferocious than usual.
“The company is still lagging its competitors with its online offering, which will become a useful weapon for those that have an established online presence,” said Richard Hunter, head of markets at interactive investor.
According to Berenberg, all players need to step up their strategy.
“Automated fulfilment is the long-term solution and grocers internationally will recognise this,” analysts concluded.
Shares in Ocado inched up 1% to 1,371.58p, while Morrison’s stock jumped 11% to 201.6p on Wednesday after lunch.