Ocado warehouse fire investigation ongoing as Q1 sales rise

Online grocer Ocado said today (19 March) it is confident in the viability of its warehouse model – which includes a significant level of robotics and automation – following the recent devastating fire at its Andover site.

The fire, which started in the early hours of 5 February 2019, destroyed the whole building – and an examination of the causes is currently being undertaken. Reports at the time of the fire, which Ocado denied, had suggested the sophistication of the tech and robotics there hampered the fire services dealing with the inferno.

In a trading update for its first quarter, Ocado acknowledged the fire – which took several days to control – did have a significant impact on its sales for the three-month period. It reported 11.2% growth in retail revenue to £404 million, but added that the fire had an impact of the equivalent to 1.2% of sales in the trading period.

The retailer said an “analysis of the optimum solutions for rebuilding has begun”, and it plans to inform the market in due course on its plans to replace the lost capacity, and the overall impact it will all have on the company’s 10-15% retail revenue growth target.

Ocado also announced that it has made continued progress increasing the capacity at its Erith warehouse, which is now processing nearly 37,000 orders per week. This is faster than originally planned, and has been fast tracked due to the problems in Andover.

The company revealed that average orders per week in the 13 weeks to 3 March, were up by 11.3% to 314,000, but average order size edged down to £110.24.

Tim Steiner, Ocado CEO, remarked: "The fire has been a setback, but it will be only a temporary one.

“Over the last few weeks, our teams have been working hard to minimise any disruption to our customers and we will build a state-of-the-art replacement facility that reflects all the innovations and improvements we have made since Andover opened in November 2016.”

Last month, Ocado and Marks & Spencer (M&S) announced a joint venture that will see M&S products sold by the online grocer and Ocado helping provide the infrastructure to support the launch and running of its new partner’s full food eCommerce offering.

Ocado supports several retail businesses around the world, including Kroger in the US, Groupe Casino in France, and ICA in Sweden, by providing the infrastructure to operate eCommerce. It didn’t offer an update on the overall performance of its technology division today.

On the M&S deal, Steiner said: “Ocado Retail has never been in a stronger position to lead channel shift while constantly setting the bar for excellence in online grocery in the UK.

“We are looking forward to the future with excitement and determination."