The Ocado Group PLC (LON: OCDO) share price increased after unveiling plans to close its oldest fulfilment centre, the Hatfield Customer Fulfilment Centre (CFC), as part of plans to revamp its network as it shifts its primary sales channel from physical stores to online orders.
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The news was well received by investors despite the company not yet closing the fulfilment centre as it waits for the completion of the nearby Luton Customer Fulfilment Centre (CFC). The company intends to keep most of its employees who will be redeployed to other CFCs.
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Ocado, which licenses grocery technology, is in discussions with colleagues regarding the upcoming reassignments and possible retrenchments once the Hatfield CFC closes.
The retailer quickly reassured investors that Customer orders currently fulfilled in Hatfield, which accounts for about 20% of Ocado.com’s 400,000 orders per week, would be moved to its high-productivity, next-generation facilities around the UK.
Ocado has about 2,300 employees based in Hatfield who will be reassigned to other CFCs. The firm hopes to deploy as many Hatfield employees as possible. The company reminded investors that the Hatfield CFC had been the cornerstone of its operations since its founding.
The facility was the first fulfilment centre opened by Ocado and has played a critical role as a testing centre and a core test bed for the company’s operating model.
Still, Ocado has unveiled many innovations over the past decade, allowing it to make massive leaps forward in both the productivity of its CFCs and improving the customer experience.
Tim Steiner, CEO of Ocado Group and Chairman of Ocado Retail, said: “As the online grocery channel grows, our new, enhanced fulfilment centres 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 at Hatfield and consider our future options for the site. Ocado.com customers will continue to enjoy the same outstanding standard of service throughout the region, which will further improve as the benefits of our new technologies are deployed across the network.
*This is not investment advice.
The Ocado share price.
The Ocado share price edged 1.41% higher to trade at 509.90p, from Monday’s closing price of 502.80p.
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