(Bloomberg)—Ocado Group plc has developed new, low-cost technology that will speed online grocery delivery, boosting the company’s prospects as it seeks to license its robotic warehouse system globally.
The technology includes lighter grids, more efficient bots and robotic arms capable of taking products directly, the company said at a launch event on Wednesday. Ocado said it can install its “grid” system more cheaply, quickly and in more locations than ever before, including smaller buildings and micro-fulfillment centers.
Ocado shares rose 5.43% to 1,505 pence at 3.33 pm in London. Some of the new technology will help existing partners including UK grocer WM Morrison Supermarket, France’s casino Guichard Perachon SA and the Kroger Co.
Okado is benefiting as the pandemic shifts consumer habits to online delivery and companies compete to deliver faster. Dozens of start-ups, including Berlin-based Gorillas Technologies GmbH and Deeja 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 replace the one-hour grocery delivery industry,” Chief Executive Officer Tim Steiner said over the phone.
As part of the changes, Ocado could enable last-minute orders as well as longer deliveries all from the same van. Grocers need not choose between providing short term or long term service to their customers. The company also unveiled a virtual distribution center that will use artificial intelligence and machine learning to help power smaller fulfillment centers closer to customers.
The new technology will help reduce labor cost in warehouses by 30% in the medium term and 40% in the long term, the company said. The updates will be available at Ocado warehouses from the second half of 2023 and most systems can be retrofitted to existing orders. Okado said the initiative will not have any material financial impact on the current year.
Ocado’s value has risen more than 500% since 2016 as investors bet the British company will become the leading provider of online grocery delivery services around the world.
The company suffered a setback in 2019 when a fire broke out in one of its automated warehouses, turning a five-floor facility in southern England into a pile of molten metal. Okado’s joint venture with Marks & Spencer Group plc resulted in a loss of approximately £35 million ($47 million) in revenue after a warehouse fire in Erith last year. Okado is “continuously improving” and “all of these features will be very secure,” Steiner said.
Okado is also engaged in a legal battle over the patent with rival Norwegian Autostore Holdings Ltd.
© 2022 Bloomberg LP
