Online grocer Ocado plans to shut customer fulfilment centre in Hertfordshire impacting 2,300 jobs

Online grocer Ocado has announced plans to close its oldest distribution center as it shifts to robotic warehouses, which will affect about 2,300 employees.

The group said it will close its Hatfield, Hertfordshire facility, which accounts for around a fifth of customer orders per week, later this year.

Orders will instead be moved to a new state-of-the-art automated warehouse in Luton, due to open in 2023.

Ocado has now started consultations with the 2,300 workers in Hatfield but said it is aiming to provide jobs for as many of those affected as possible in nearby locations, such as Luton.

The consultation is expected to be completed this summer.

Ocado plans to close its customer processing center in Hertfordshire. Pictured are Ocado vans returning to the Hatfield depot

The group said it expected no change in the volume of orders fulfilled by closing the Hatfield centre, adding that current customer orders would be moved from the site to the company’s other facilities in the UK.

Ocado also said it expects improved 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 fulfillment centers 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 in Hatfield and consider our future options for the site.

“Ocado.com customers will continue to enjoy the same excellent standard of service across the region, which will continue to improve as the benefits of our new technologies are deployed across the network.

“We have many brilliant colleagues from Hatfield 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 company as possible and expect to retain a large proportion of the colleagues affected by these changes, either in our new Luton CFC or in our wider UK network.

“We will do everything we can to support those affected through the consultation.”

Ocado has now begun consultations with Hatfield’s 2,300 employees (stock image)

An employee arranges boxes of goods for delivery at the Ocado distribution center in Hatfield (stock image)

Ocado said its new robot warehouses can pick more than 200 items per hour, compared to about 150 for the original Hatfield site.

It added that the newest warehouses also consume less energy.

The company hopes the shift to these automated sites will deliver a better customer experience and increase its ability to offer same-day deliveries.

Ocado had seven warehouses in the UK, before the launch of the Luton site, and many more abroad.

It employs over 19,700 people, including just over 14,290 in the UK in the logistics sector.

The company revealed in February that intra-group losses increased from £177m in 2021 to £501m in 2022, with retail operations fluctuating to an underlying loss of £4m.

The company was hit by a reduction in customer spending per store and by surging cost pressures, which took its toll on the operating result.

The company recently said its retail operations remain on track to return to profit this year after a 3.4 percent sales increase in the first quarter.

Energy Secretary Grant Shapps, local MP for Welwyn Hatfield, said he was “appalled” by Ocado’s plans to close the Hatfield facility.

He said, “Ocado has been a major employer in the region for many years.”

“I will be speaking with the company today to better understand their next steps,” he added, emphasizing that he would “work with the company and voters to ensure affected employees receive the support they need to Ocado or find new work locally’.

“Ocado.com customers will continue to enjoy the same excellent service throughout the region,” said the CEO

In February, Ocado said it would match prices on more than 10,000 products listed on Tesco’s website from March 1 as profits came under pressure from the cost-of-living tightness.

Price-matched items included Ocado’s Own Range essentials, including items such as milk, eggs, and pasta, as well as some branded items.

Four pints of value grade semi-skimmed milk have 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 stores.

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 the price of branded and private label products.

“And now with our Ocado Price Promise, we compare more than 10,000 products, comparing the like-for-like-shopping price with that of tesco.com, so customers can be sure that they are getting value for money with Ocado. to get.’

The price war came after Ocado lost more than 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 benefited from huge demand as people opted for grocery delivery during the lockdowns.

Ocado struggled to meet customer demand during the pandemic as it operates out of distribution centers and warehouses and was unable to open new ones fast enough to meet the surge in online orders.

Like other firms, Ocado has raised prices to offset the effects of rising inflation and rising fuel costs, with the company’s average selling price rising 4.5 per cent to £2.55 each last year.