Ocado CFC

Source: Ocado

The retailer’s Hatfield customer fulfilment centre employs 2,300 staff

Ocado plans to close its first fulfilment centre in Hatfield by the summer.

The company is set to shift the customer fulfilment centre’s order output to its newer sites across the UK, including a soon-to-launch site in Luton.

Ocado called the Hatfield site – which currently handles around a fifth of Ocado Retails order volume – “a foundation stone in the Ocado story”.

While it had served as a “core test bed for the Ocado operating model”, Hatfield had been usurped in terms of innovation and productivity by other sites, it added. While Hatfield has a ‘units picked per labour hour’ of around 150, newer sites were “consistently achieving well over 200”.

“As the online grocery channel grows, our new, enhanced fulfilment centres and technologies will drive a step-change in customer experience and efficiency,” said Tim Steiner, CEO of Ocado Group and chairman of Ocado Retail.

“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.”

A consultation process for the Hatfield site’s 2,300 employees is now under way.

“Ocado’s priority and focus will be to redeploy as many people as possible to other sites, primarily to the soon to be opened Luton CFC,” the company said.

Retail and distribution trade union Usdaw said the closure plan was “obviously very concerning”.

“Our priorities are to save as many jobs as possible, seek redeployment opportunities if the closure goes ahead and get the best deal available for staff affected,” said Dave Gill, Usdaw national officer.

The plan was not expected to result in any change to the volume of orders fulfilled, Ocado said. Nor does the company expect a material financial impact from the closure.

Once the new Luton site has come online, Ocado Retail’s total capacity will increase from 400,000 to 525,000 orders per week.

JPMorgan analyst Marcus Diebel said: “We see this move as a sensible step towards better efficiency with very limited financial impacts or one-off cash costs for 2023 and positive margin impacts from 2024.” 

It is understood Ocado’s head office will remain in Hatfield.

In a letter to Ocado on Tuesday, Welwyn Hatfield Borough Council wrote to “express our shock and disappointment in your sudden decision to halt operations”.

The move would be a “significant change” for the area, it wrote, adding “your decision is particularly disappointing”.