Q: 2016 has been characterised by tough competition, deflation and cost increases. To what extent was Ocado affected by industry conditions?
A: Similar to retailers across the sector, Ocado has felt the headwinds from this challenging retail environment. However, during this time we increased sales and grew our share of the grocery market. We did this by focusing on improving our customer proposition to support growth and driving efficiency through scale, technology and operational improvements. Together this has helped to mitigate the impact on our gross margins.
Despite these challenging conditions we have not stopped further developing our market leading technology and IP to ensure that we offer a sustainable solution for ourselves and our platform customers that is resilient in all market conditions.
Q: What is the update regarding your next CFC in Andover?
A: Our third CFC located in Andover, Hampshire, in the south of England, commenced operations in November 2016. This CFC incorporates the first installation of our new proprietary physical fulfilment solution.
We expect that the Andover CFC will add capacity of around 65,000 orders per week or approximately £350 million in annual sales when at full scale, enabling us to continue to grow at pace. This complete "fulfilment in a box" solution is modular and scalable, adding significant flexibility to the capacity planning for our own retail business and that of our existing and future partners. This CFC is expected to be more capital efficient compared to our earlier CFCs and more efficient to operate.
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Andover and New Technologies case study
Q: Please outline your international aspirations. Should we expect to see deals in 2017?
A: We plan to commercialise our years of learning and innovation through working with international partners using the Ocado Smart Platform. We remain confident in our proposition and continue discussions with multiple retailers across several geographies with the view of signing multiple agreements in the medium term.
Ocado Smart Platform