Grocery technology group Ocado has announced the launch of six new customer service centers (CFCs) in the first half of 2022, also increasing the number of retailers using its Ocado Smart Platform (OSP) to 11 in nine countries.
But despite the introduction of these CFCs and global partnerships with retailers using OSP, Ocado Retail saw revenue fall 8% year-on-year compared to the first half of 2021 to £1.1bn in the first half of 2022 d. The retailer attributes this to the post-pandemic recovery and UK cost of living crisis.
Highlighting new CFCs, international OSP customers, funding and the new Ocado Re:Imagined project ‘building blocks’ for the group, Tim Steiner, chief executive of Ocado Group, said: “The last six months have seen significant progress across the Ocado Group and we have put all building blocks to deliver profitable growth and strong cash flows…regardless of the near-term challenges for UK consumers, we look ahead to the future with confidence.”
Ocado has always been at the forefront of technology adoption, testing technologies such as autonomous delivery, 3D printing and robotics.
While Ocado’s retail business, which is a 50/50 joint venture with Marks & Spencer, reported revenue growth of 19.8% in the first half of 2021, this year has told a different story, with investment and consumer behavior weighing on earnings .
In addition to the six CFCs the group is launching in the first half of 2022, the brand now also has 16 CFCs worldwide to support recent partners on the Ocado Smart Platform, which is a managed service specific to grocery retail. OSP software is used in conjunction with physical technologies in purpose-built fulfillment centers.
The brand is increasing the number of partners using this service. There are currently 11 partners worldwide using the platform, eight of which use it for online grocery.
In January 2022, the group announced its Ocado Re:Imagined project, which includes changes to its OSP technology, including new robotics, a collection grid and design of collection sites, which will increase supply chain efficiency. It is due to be released in 2023.
The group is also launching a smaller automated site in Canning Town in the first half of 2022, aimed at servicing fast food delivery service Ocado Zoom, which the firm says also “represents a significant step” in the use of its OSP for handling large volumes from a small site.
Ocado’s retail division claims a 12% year-on-year increase in customers using the brand to shop in the first half of 2022, reaching 867,000 active customers.
But the retailer said a change in customer behavior as a result of the lifting of Covid-19 restrictions and the ongoing cost of living crisis in the UK had led to a 13% year-on-year drop in the average price of customer baskets.
Much of the retailer’s capex for the rest of the year, around £800m, is focused on the CFC rollout, smaller sites serving Ocado Zoom and technology investment at OSP, all of which are expected to reap gains in the future, even though it costs money in the short term.