You must be aware that a lot of online retailers are opening their new warehouses in various parts of the world thanks to the major boost in e-commerce after the pandemic which is still continuing as people have adopted online shopping instead of going to stores physically. Between all these, there is one company that has announced shutting down one of its oldest robotic warehouse in UK and the brand is Ocado. Ocado, in a joint venture with Marks and Spencers Group, is closing its first automated warehouse in Hatfield, England. Due to this warehouse closure, it is expected that 2300 jobs are at risk.
However, it is worth noting that there is nothing wrong at the company that the investors have to worry about. Instead, the reason why Ocado has decided to close its automated warehouse is because of the lack of speed despite the fact that this warehouse currently handles about 20% of weekly grocery orders. Ocado has already built more advanced warehouses across the UK that can handle twice as many orders as this warehouse. Ocado also mentioned that its orders from Hatfield will now be managed by its new warehouse in Luton and it will offer jobs to workers affected by this warehouse’s closure and to its other sites as well.
It is worth noting that while everyone was having a great experience with online shopping, Ocado failed to catch a break as it was struggling with warehouse capacity during the peak time of pandemic and due to that reason, it lost much of its business to its rivals who were even offering lower prices. Now that it has finally increased its warehouse capacity, the cost-of-living crisis in the UK has forced every retailer to downscale and this has affected Ocado as well.
Ocado is also known to be price-matching its products to retailers such as Tesco so that it can offer better experience and win over lost customers. The closure of its Hatfield facility will also reduce its overcapacity and reduce costs. It looks like the announcement of its warehouse closure did not affect investors much as Ocado’s shares remained almost on the same level as before.