UK's Ocado to close its oldest warehouse, 2,300 jobs at risk

LONDON (Reuters) -British online supermarket and technology business Ocado Group said on Tuesday it planned to close its oldest automated warehouse, putting about 2,300 jobs at risk.

The site at Hatfield, north of London, serves Ocado Retail, the online grocery joint venture of Ocado Group and Marks & Spencer.

The warehouse, or Customer Fulfilment Centre (CFC) as Ocado calls it, opened in 2002 but has been superseded by the advanced robotic technology of the group's newer sites.

Ocado has started a consultation process with affected workers, hoping to redeploy as many as possible to its other sites, primarily to a soon-to-be-opened warehouse in Luton, about 14 miles from Hatfield.

It expects the consultation to close this summer, with Hatfield operations planned to halt in line with the start of operations at Luton.

Ocado does not expect Hatfield's closure to impact the volume of orders fulfilled.

Customer orders currently fulfilled in Hatfield, some 20% of the joint venture's 400,000 orders per week, would be moved to Ocado's other UK sites, including Luton.

While during the pandemic Ocado didn't have enough capacity to meet consumer demand, it currently has surplus capacity, which represents a cost to the business in the short term.

In November, Ocado said it had paused the planned build of two new CFCs in the northwest and southeast of England, reflecting "a more prudent and disciplined approach to capacity roll-out".

Online grocery's share of the total grocery market in Britain was about 7% before COVID-19. It peaked at about 15% during the pandemic and has since come off to about 11%.

(Reporting by Aby Jose Koilparambil in Bengaluru and James Davey in London; Editing by Nivedita Bhattacharjee and Mark Potter)