Jakub JirsÃ¡k - stock.adobe.com
Around 300 tech workers have been added to Ocado’s workforce in the first half of 2020 to cater for increased demand during the Covid-19 coronavirus pandemic alongside its strategy of continuous innovation, it announced in its interim half-year results.
The digital grocer claimed the mass shift to online grocery shopping as a result of the pandemic could signal a permanent move, citing research that suggests customers have stuck with online shopping habits event as the crisis has eased, with many intending to carry on doing so once it is over.
Ocado said it had hired 300 additional tech employees to ensure the firm and its partners could meet increased demand while also growing its platform to “extend [it’s] leadership as a solutions provider for the fulfilment of online grocery”.
Tim Steiner, CEO of Ocado Group, said: “The world as we know it has changed. As a result of Covid-19, we have seen years of growth in the online grocery market condensed into a matter of months, and we won’t be going back. We are confident that accelerated growth in the online channel will continue, leading to a permanent redrawing of the landscape of the grocery industry worldwide.
“This will mean more demand for Ocado Smart Platform from current and prospective partners, and our recent fundraising will ensure that we are able to meet that demand. It will also mean that we can invest more capital in innovation for our partners and further expand our leadership as the world’s preeminent solutions provider in online grocery.
“Seizing the future will, of course, require the same mix of constant questioning and innovation, focus and quiet determination that has brought us so far. I have no doubt that we will rise to the challenge, taking advantage of a scale of opportunity that we have never seen before.”
Tim Steiner, Ocado Group
In its half-year interim results for the 26 weeks to 31 May 2020, Ocado Group reported £19.8m earnings before interest, taxes, depreciation and amortisation, a drop of 35.5% year on year, as well as a loss before tax of £40.6m. This, the firm said, was a result of increased investment as it helped partners roll out its software offering, the Ocado Smart Platform, among other things.
But despite these losses, the coronavirus pandemic saw sales grow by 27.2% for the retailer, which claims to be the fastest-growing grocer in the UK.
The grocer also flagged a number of technological advancements across its group in the first half of 2020, including the development of an Ocado Zoom site in West London, which was completed a year ahead of schedule; three working robotic picking arms in its Erith customer fulfilment centre, the technology of which has been significantly improved; and the launch of an overseas customer fulfilment centre in Great Lakes in North America in partnership with Kroger.
Adapting to lockdown shopping behaviour
Many retailers have been struggling to meet the increased demand for online deliveries during the pandemic, in a sector already facing problems as consumers shifted away from physical stores and towards digital or convenience shopping.
Coping with the boom in pandemic shopping was not without its problems for Ocado either, with the retailer claiming it had made “changes to the model” to adapt to increasing demand, including strategies such as giving loyal and vulnerable customers priority. The retailer even had to pull its website at one point early on in the UK’s lockdown to cope with the volume of traffic.
Ocado has always seemed more of a technology company than a retailer, having previously trialled technologies such as self-driving delivery vans and the robotic picking arms it now uses in some of its fulfilment centres.
Its automated warehouses deal with the movement and storage of products depending on when and where they will be needed by human bag packers, a model the retailer claimed to have spent years developing only to try to disrupt it itself with further technology adoption.
Over the past five years, Ocado Technology has worked with partners across Europe to develop a humanoid robot called the Armar-6, which could help humans with maintenance tasks to free up workers for more skilled work.
It also developed the Ocado Smart Platform so the firm could offer online grocery capability to external businesses through a suite of managed services.
Its market share in the UK is partially down to a deal with UK retailer Marks & Spencer (M&S), a £750m joint venture which will see M&S take a 50% share in Ocado’s UK retail business and use already-developed technology to grow its online delivery remit.
From September 2020, when Ocado’s deal with Waitrose expires, customers will be able to order M&S products through the Ocado platform.