Online grocer Ocado has announced plans to shut its oldest distribution centre as it shifts towards robotic warehouses in a move that will affect around 2,300 workers.
The group said it will close the site in Hatfield, Hertfordshire, which accounts for about a fifth of its customer orders each week, later this year.
The orders will instead be shifted to a new state-of-the-art automated warehouse in Luton, which is due to open in 2023.
Ocado has now started consultation with the 2,300 workers based at Hatfield, but said it aims to offer jobs to as many of those affected as possible at nearby sites, such as Luton.
The consultation is expected to close this summer.
The group said it will close the site in Hatfield, Hertfordshire, which accounts for about a fifth of its customer orders each week (stock image inside the site)
Ocado plans to shut its Hertfordshire customer fulfilment centre. Pictured are Ocado delivery vans returning to the depot in Hatfield
The group said it did not expect any change to the volume of orders fulfilled by closing the Hatfield centre, adding that current customer orders from the site would be moved to the company’s other facilities around the UK.
Ocado also said it expected improvement in productivity and increased capacity for same-day deliveries with the help of new technologies.
Tim Steiner, CEO of Ocado Group and Chairman of Ocado Retail told MailOnline and This is Money: ‘As the online grocery channel grows, our new, enhanced fulfilment centres and technologies will drive a step change in customer experience and efficiency.
‘With this capacity coming online, now is the right time for us to halt operations at our oldest facility at Hatfield and consider our future options for the site.
‘Ocado.com customers will continue to enjoy the same outstanding standard of service throughout the region, which will further improve as the benefits of our new technologies are deployed across the network.
‘We have many brilliant Hatfield-based colleagues who have been with us for a long time and are a big part of our journey.
‘We want to keep as much of this talent and experience within the business as possible and expect to retain a large proportion of colleagues impacted by these changes, either in our new Luton CFC or across our wider UK network.
‘We will be doing everything we can to support those affected through the consultation.’
Ocado has now started consultation with the 2,300 workers based at Hatfield (stock image)
An employee arranges boxes of goods for delivery at the Ocado distribution centre in Hatfield (stock image)
Ocado said its new robotic warehouses can pick well over 200 items an hour, compared with around 150 for its original Hatfield site.
It added that the newest warehouses also use less energy.
The firm hopes that the shift towards these automated sites will drive better customer experience and boost its ability to offer same day deliveries.
Ocado had seven warehouses across the UK, before the launch of the Luton site, with many more overseas.
It employs more than 19,700 people, including just over 14,290 across the UK in the logistics business.
The firm revealed in February that losses widened across the group to £501 million in 2022 from £177 million in 2021, with its retail business swinging to an underlying loss of £4 million.
It was hit by a cutback in customer spending per shop as well as soaring cost pressures, which took their toll on its bottom line.
The business said recently that its retail business remains on track to return to profit this year after a 3.4 per cent rise in first-quarter sales.
Energy Secretary Grant Shapps, who is the local MP for Welwyn Hatfield, said he was ‘shocked’ by Ocado’s plans to close the site in Hatfield.
He said: ‘Ocado has been an important employer in the area for many years.’
‘I will be speaking to the company today to better understand their next steps,’ he added, stressing he would be ‘working with the company and constituents to ensure impacted employees have the support they need to stay at Ocado or find new work locally’.
‘Ocado.com customers will continue to enjoy the same outstanding standard of service throughout the region,’ the CEO said
In February Ocado said it would match prices against over 10,000 products listed on Tesco’s website from March 1 as its profits came under pressure amid the cost of living squeeze.
Price-matched items included Ocado’s Own Range essentials, which include items such as milk, eggs and pasta, as well as some branded goods.
Four pints of semi-skimmed milk in the value range since cost £1.65, while carrots cost 45p and buyers can get six medium free-range eggs for £1.30.
A standard 500g bag of fusilli pasta costs 95p at both retailers.
Hannah Gibson, CEO of Ocado Retail, said at the time: ‘At Ocado, everything we do starts with our customers and we know how important value is to them right now. We continue to support our customers by investing in price across branded and own-brand products.
‘And now with our Ocado Price Promise, we’re comparing over 10,000 products, matching the price of like-for-like shopping to tesco.com, so customers can be sure they’re getting great value at Ocado.’
The price war came after Ocado’s losses grew to over half a billion pounds last year as the online supermarket struggled to attract customers.
It marked a sharp decline since the pandemic, when the company cashed in on a demand boom as people opted for grocery deliveries during lockdowns.
Ocado battled to keep up with customer demand during the pandemic because it operates from distribution centres and warehouses and could not open new ones quickly enough to meet the surge in online orders.
Like other firms, Ocado has hiked prices to offset the effects of surging inflation and rising fuel costs, with the company’s average selling price increasing by 4.5 per cent last year to £2.55 per item.
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