Ocado confident of sales surge as robot warehouses ramp up - CILT(UK)
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Ocado confident of sales surge as robot warehouses ramp up

19 September 2018/Categories: CILT, Industry News, Logistics & Supply Chain, Operations Management


Ocado has posted a slowdown in retail sales growth, but hailed the success of its newest warehouse after it notched up 20,000 orders since opening.

The group said retail revenues rose 11.5% over its third quarter to September 2, which marks a slowdown on the 11.7% growth seen in its first half.

Despite the slight pull back on growth, Ocado said it remained within its predicted growth range for the full year of between 10% to 15%.

Average total orders per week rose by 11.4% to £283,000, with the average value of customer orders staying largely flat at £106.26.

It cheered a good performance from its newest state-of-the-art warehouse in Erith, south-east London, which it said had processed more than 20,000 customer orders in the first 14 weeks since launch.

It said this took its other recently opened site in Andover, Hampshire, 15 months to achieve.

Erith has the potential to become the largest automated warehouse for online grocery in the world, at full capacity, it added.

Tim Steiner, Ocado’s chief executive, said: “The new capacity from Andover and Erith, our robotic third and fourth warehouses, is helping meet consumer demand for our services and drive the channel shift which is transforming grocery retailing in the UK.

“We are proud to have opened our Erith Customer Fulfilment Centre this summer on time and on budget.”

He added the group was on track to deliver a raft of new robotic warehouses for retailer partners over the coming years.

Ocado is “fulfilling our goal of changing the way the world shops”, he said.

The group, which works with Morrisons in the UK, has recently announced long-awaited international deals, which has sent its shares soaring.

Ocado provides the technology to its partners to allow them to take their services online.

The technology, known as the Ocado Smart Platform, is an automated system for packing orders in warehouses, which is operated by robots.

But Ocado has recently warned that investment in the new warehouses and technology behind its automated systems will hit earnings this year, with spending set to surge to £210 million.

Shares in the group rose 4% after the trading update.

It has been catapulted into the FTSE 100 Index for the first time recently following a share surge on the back of its international deal success.

This has sparked bumper payouts for its bosses, with the group revealing in July that Mr Steiner and other senior executives will share an extra £9 million in bonuses thanks to the share price jump.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “Ocado’s equity market value is now greater than the likes of Morrison’s, Royal Mail and M&S.”

But he added the group “still needs to turn overseas partnerships into profits, and details of its commercial relationships with US retailer Kroger are still being hammered out”.


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