Ocado to ramp up use of robotic arms to speed-pack shopping

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

UK online supermarket Ocado is ramping up the use of robotic arms to pick and pack groceries for shoppers at far faster speeds.

Ocado Retail chief executive Hannah Gibson said that the company’s new warehouse in Luton, Bedfordshire, will double the number of robots with arms from 22 currently to 44 “in the very near future” during a tour of the 346,000 sq ft site which opened in September.

The upmarket grocer’s new generation of machines, which was first unveiled in 2022, can pick individual products directly from storage boxes, compared with its existing robots which criss-cross metallic grids to retrieve the boxes before sending them to humans to finish the grocery packing for delivery. 

Gibson added that about half of the range in Luton, where it has 50,000 products, will be handled by robotic arms “in the near term”, with a longer term target of about 80 per cent. It has more than 500 human packers at present. The warehouse was built to improve efficiency alongside existing workers, without putting jobs at risk.

Ocado Group, which also has a logistics division alongside the robotics and grocery businesses, was founded in 2000 by former Goldman Sachs bankers. Although it is known for selling groceries online to Britain’s middle classes, it has staked its future in recent years on selling its robotic warehouses to other traditional supermarkets across the world to help them compete with the likes of Amazon. Marks and Spencer owns half of Ocado Retail and sells its food on Ocado’s website.

“This technology enables us to have a bigger choice . . . lower substitutions, and the operating model is more efficient than a store-based model,” Gibson added.

A 50-item order can be picked in just 10 minutes in the Luton warehouse, according to Gibson, while it takes significantly longer for the same order to be picked by staff in physical supermarkets. It has 11 customer fulfilment centres, including Ocado Zoom sites and smaller depots, in the UK.

Over the past two years investors have soured on Ocado as rapidly rising interest rates and high inflation have squeezed consumers. The stock has tumbled 77 per cent since hitting a record high during the pandemic-driven boom in online shopping.

However, a deal last month to sell its technology and software to a non-food retailer for the first time, Canadian healthcare provider McKesson, reversed some of the losses.

Ocado has also fully automated its freezer section for the first time in Luton. At its oldest warehouse in Hatfield, which closed earlier this year, between 10 to 12 people would work in a freezer environment every day.

“It’s a tough place to get labour for — it’s not a particularly enjoyable job, being in a freezer all day long,” Gibson said. 

She added she is not expecting any availability issues in the run-up to Christmas despite some “[supply] issues with broccoli and cauliflower”. Some farmers have warned of record low yields in the UK owing to bad weather in recent months. The Luton warehouse will handle 6,269 turkeys this Christmas. “We always make sure we have some spare,” Gibson added.