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Ocado Unveils Lighter Robots to Help Grocery Giants Like Kroger Take on Amazon

Ocado
  • Ocado on Wednesday announced a new warehouse robot which it says is lighter and more energy-efficient than its predecessor.
  • The U.K. company sells its retail automation technology to top supermarket chains including Kroger, Britain's Morrisons and France's Casino.
  • Ocado also unveiled a so-called virtual distribution center, which the firm says will help slash delivery times.

LONDON — U.K. retail tech company Ocado on Wednesday unveiled a suite of new products aimed at helping large grocery chains take on Amazon and a wave of new rapid grocery delivery start-ups.

While Ocado is most well known for its online supermarket, a top focus for the company is robotics and automation tools that it deploys in warehouses to pick and pack items and prepare them for delivery.

Ocado sells its technology to top retailers including Kroger, Britain's Morrisons and France's Casino.

The company announced two new robots as part of its tech showcase Wednesday. The first is its 600 Series bot, which Ocado said is lighter and more energy-efficient than its predecessor, with over half of its parts 3D printed.

The second is a set of advanced robotic arms that pick items directly off the grid in the company's warehouses. Ocado says it's developed artificial intelligence technology to enhance the precision of the arms to something closer to that of human pickers.

Meanwhile, Ocado also touted what it calls a "virtual distribution center" — essentially a combination of software smarts and small micro-fulfillment centers connected through one system. Ocado said the offering would maximize capacity of items in each warehouse while also slashing delivery times.

Shares of Ocado rose more than 5% on Wednesday. The stock has declined sharply in the past year, slumping 46%, with investors fretting over high-growth stocks as economies emerge from the Covid-19 pandemic and central banks begin to talk of tightening monetary policy.

Rapid delivery race

The news comes as retailers face competition not only from Amazon, but a slew of upstarts offering grocery delivery in a matter of minutes. Firms such as Getir and Gorillas have emerged across Europe and parts of the U.S. recently, backed by a flood of cash from venture capitalists.

Such companies rely on so-called dark stores, tiny warehouses that are designed to ship online orders rather than serve customers in-store.

Tim Steiner, Ocado's CEO, said he doesn't think these rapid grocery players pose a meaningful threat to big retailers.

"There's very little differentiation between all the players out there," Steiner said on a call with reporters Wednesday. "They're all remarkably similar."

Some start-ups have been acquired by larger players of late, with Getir buying U.K. rival Weezy and Gorillas snapping up French firm Frichti. Ocado's chief said he's "not surprised" to see consolidation in the sector given how crowded it's become.

As for how the company plans to fund building all its new technology products, Steiner said cost shouldn't be an issue since the new robots will be more capital-efficient than its current models. But he added the firm has enough cash on its balance sheet — as well as access to bank financing — to eventually deploy them at scale.

Ocado plans to roll out the products to its retail partners by the end of 2023. The initiatives are unlikely to have a material impact on Ocado's full-year 2022 results, the company said.

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