Ocado Group Plc’s online retail joint venture with Marks & Spencer Group Plc is closing the first automated warehouse built in Hatfield, England in a move that puts 2,300 jobs at risk.
(Bloomberg) — Ocado Group Plc’s online retail joint venture with Marks & Spencer Group Plc is closing the first automated warehouse built in Hatfield, England in a move that puts 2,300 jobs at risk.
The Hatfield warehouse is the oldest in Ocado Retail’s network and currently handles about 20% of all weekly grocery orders, but does not have the same up-to-date technology as more recently built facilities. About 150 items can be picked each hour at Hatfield, compared to well over 200 at newer sites, the company said Tuesday.
Orders from Hatfield will be handled out of Ocado’s highly automated warehouses around the UK including in nearby Luton, England, the company said, and it will also offer jobs to affected workers at Luton and its other sites.
Ocado Retail struggled to make the most of the switch to online shopping during the pandemic as it lacked enough warehouse capacity to fulfill orders. Since then it has increased its ability to handle orders but the cost-of-living crisis has seen it lose customers to cheaper rivals.
“Ocado’s decision to close its oldest customer fulfillment center (CFC) goes some way to addressing the overcapacity that the rapid buildout of CFCs has created as shoppers prefer purchasing smaller amounts more frequently in supermarkets,” said Charles Allen, retail industry analyst at Bloomberg Intelligence.
Ocado Retail is also working to improve its price perception and is price matching thousands of products with Tesco Plc in a bid to win over shoppers.
Ocado’s shares were up 3% at 12:30 pm in London.
(Updates with comment from analyst in fifth paragraph, shares in final paragraph.)
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