Ocado is to cut 1,000 jobs as the retail technology business attempts to slash £150m in costs through a substantial restructuring programme.
The company confirmed that about 5% of its global workforce will be affected. About two-thirds of the jobs are expected to go from the UK, where the company is based in Hatfield, Hertfordshire. About half the jobs going are in technology, with the rest made up of support staff.
The business, which provides technology for robotic warehouses for supermarket chains, said it plans to scale back research and development, helping it cut about £150m in technology and support costs in 2026.
Tim Steiner, the chief executive of Ocado Group, said it no longer needed as many people to develop new projects after completing work on a new generation of robotic equipment and website and app technology for retailers, which it was now delivering to clients around the world.
He said the company was also “benefiting from significant productivity enhancements from AI”, which were helping to write and check software code so the group could “get more done with less people”.
Steiner also admitted that “the market for large automated distribution centres in the US is smaller than we thought it would be”, after a brace of recent setbacks with business partners in North America.
He said, however, that demand for Ocado technology was “bigger than ever” because it could put technology, including smaller-scale versions of its robotic equipment, into local stores to help make picking and packing groceries for home delivery more efficient.
As part of the overhaul, Ocado will restructure its commercial, support and R&D operations, merging Ocado Solutions and Ocado Intelligent Automation into a single division.
The latest layoffs come only a year after Ocado cut 500 technology roles, saying it was using more AI to help with research and engineering.
Steiner said: “ We are grateful to colleagues who are affected by these changes, and whose talent and hard work have made a lasting contribution to Ocado. We will support those impacted through this process.”
He said Ocado had “zero expectation of more job cuts” in future years but “business is tough and you have to make difficult decisions sometimes”.
Shares in Ocado dived almost 7% on Thursday and the group’s market value is now down by more than a third in the past year after a series of disappointing announcements about its future plans.
Analysts said on Thursday that Ocado had delivered a solid performance in the year to 30 November, after it reported a 12% increase in sales to £1.4bn. The group made an underlying pre-tax loss of £353m, however, similar to the £365m a year before.
It plans to open six more robotic distribution centres for its international partners in the next two or three years in Japan, South Korea, the US and Spain, helping to offset recent closures in North America.
Ocado said last month that its Canadian partner was closing a warehouse that uses its robots and automation technology. It announced that Sobeys would be shutting the Calgary facility, saying it was “largely due to the Alberta grocery e-commerce market’s size and the rate of expansion being slower than originally anticipated”.
The decision came less than three months after Ocado’s US partner Kroger closed three warehouses.
While Ocado is known in the UK as an online grocer, much of its business is built on providing its proprietary software and robotics, known as the Ocado Smart Platform, to other companies to run their delivery operations. The company currently has 30 operational sites around the world.
Its UK retail arm is a joint venture with Marks & Spencer and reports separately from the technology business. Ocado Group said the retail division increased sales by 15% to £3bn and it made an operating loss of £27.5m, narrowing from £48.5m a year before.
