A fire at an Ocado warehouse in 2019 cost £111.8m © Hampshire Fire and Rescue Service
A fire at an Ocado warehouse in 2019 cost £111.8m © Hampshire Fire and Rescue Service

Ocado to spend £600m opening robotic warehouses

13 February 2020

Ocado is preparing to spend around £600m this financial year on opening a series of robotic warehouses for overseas partners, but the destruction of a flagship warehouse in the UK hit profits.

The company revealed in its annual results for 2019 that losses had quadrupled to £214.5m.

This was largely due to the destruction in February last year of one of its flagship warehouses in Andover, Hampshire, in a fire.

The cost of the damage has been put at £111.8m, and while the cost will be recouped through insurance the payout will take time, the company warned.

Over the next year Ocado is set to bring the number of high-tech customer fulfilment centres (CFCs) around the world to 30.

The move aims to further Ocado’s transformation from grocery deliverer to provider of retail technology.

The first half of the year will see the opening of state-of-the-art facilities for Sobeys in Toronto, Canada, and Casino in Paris, France.

Last year it also formed a 50:50 joint venture with M&S to transform online grocery retail in the UK.

“The joint venture with M&S puts each area of the business in a better position to grow,” said CEO Tim Steiner.

“As a leading online grocer in the UK, Ocado Retail will now also benefit from M&S’s well-known expertise in food innovation and quality and their sizeable customer base that hasn’t been able to shop M&S online until now.”

Ocado has also struck partnerships with Kroger in the United States, Coles in Australia, and most recently Aeon in Japan.

Steiner said the Andover fire had seen Ocado lose around 10% of its capacity.

However July 2019 also saw the company’s first robotic picking cell go online in Erith.

“The robotic arm picks individual items for real customer orders. We are expecting the introduction of additional robotic picking cells throughout 2020 and beyond,” said Steiner.

Ocado warned that underlying losses could worsen in 2020 as it absorbs the cost of fitting out new distribution centres for itself and its technology clients.

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