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(Bloomberg)—Ocado Group Plc has developed new, lower-cost technology that will speed up online grocery deliveries, boosting the company’s prospects as it seeks to license its robotic warehouse systems globally.
The technology includes lighter grids, more efficient bots and robotic arms able to directly pick products, the company said Wednesday at a launch event. Ocado said it can install its “grid” systems more cheaply, quickly and in more locations than before, including smaller buildings and micro-fulfillment centers.
Ocado’s shares were up 5.43% to 1,505 pence at 3.33pm in London. Some of the new technology will help existing partners including U.K. grocer Wm Morrison Supermarkets, France’s Casino Guichard Perrachon SA and Kroger Co. in the U.S.
Ocado is benefiting as the pandemic shifts consumer habits towards online delivery and companies compete to deliver faster. Dozens of start-ups including Berlin-based Gorillas Technologies GmbH and Dija in London are now aiming to deliver groceries in less than 30 minutes, building on the growth of services like Uber Eats and Deliveroo.
“Over time this is going to change the under one-hour grocery delivery industry,” Chief Executive Officer Tim Steiner said by phone.
As part of the changes, Ocado can enable delivery of last-minute orders as well as those with longer lead times all from the same van. Grocers don’t have to choose between offering a short-term or longer-term service to their customers. The company also unveiled a virtual distribution center which will use artificial intelligence and machine learning to help power smaller fulfillment centers closer to customers.
The company said the new technology will help reduce labor costs in the warehouses by 30% in the medium term and 40% in the longer term. The updates will be available in Ocado warehouses from the second half of 2023 and most of the systems can be retrofitted into existing orders. Ocado said the initiatives will not have a material financial impact on the current year.
Ocado’s value has soared by more than 500% since 2016 as investors bet that the British company will become the premier provider of online grocery delivery services worldwide.
The company suffered a setback in 2019 when one of its automated warehouses caught fire, reducing the five-floor facility in southern England to a pile of molten metal. Last year a fire at a warehouse in Erith cost Ocado’s joint venture with Marks & Spencer Group Plc about 35 million pounds ($47 million) in lost revenue. Ocado is making “constant improvements” and “all these facilities will be very safe,” Steiner said.
Ocado is also engaged in a legal battle over patents with Norwegian rival AutoStore Holdings Ltd.
© 2022 Bloomberg L.P.
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