SMP.L Share News (SMP)

(Sharecast News) - Ocado Group announced the location of a sixth 'customer fulfilment centre' (CFC) in the UK on Thursday, to support the growth plans of its grocery retail division.
The FTSE 100 retailer and fulfilment technology provider said it would be Ocado Retail's first 'mini' fulfilment centre, and would be located in Bristol.

It said the facility would have the capacity for more than 30,000 orders per week, compared to the approximately 85,000 orders per week expected from 'Ocado CFC 5', currently under construction at Purfleet.

As a result of the benefits of its fulfilment system, the facility was being built in an existing warehouse and was expected to go live either at the end of 2020 or early in 2021, bringing the new capacity into operation "significantly faster" than its purpose-built standard-sized fulfilment centres.

The firm said that, despite its smaller size, it expected the Bristol mini-CFC to achieve productivity close to that in its standard facilities.

It explained that the 'mini-CFC' would bring further benefits to Ocado Retail, as it created the opportunity to serve all of its customers with a full grocery range directly from the facility.

That meant customers in Bristol and the surrounding area would have a wider range of options for delivery, including placing orders for delivery later the same day.

It would also mean saving the cost of spoke sites, offsetting most of the additional costs of the supply chain.

In further developing a mix of different sizes of facility, Ocado said it was creating a "unique and flexible" ecosystem.

It said that in future, mini-sized fulfilment centres would complement the standard-sized ones to build a fulfilment network, including in areas not suitable for larger facilities.

That, Ocado said, would deliver long-term network benefits, enabling all Ocado Solutions partners to reach more households, while catering to the wide and growing range of shopping missions that customers expected to be served through online grocery.

The Bristol mini-CFC, consisting of a 150,000 square foot warehouse in Avonmouth delivered by St. Modwen, was expected to support around 815 jobs in the local area.

"The Ocado Smart Platform is constantly evolving as we innovate to adapt to changing customer needs," said Ocado Group chief executive officer Tim Steiner.

We can now deliver the best customer experience across a whole range of customer missions, through CFCs, mini-CFCs, and micro fulfilment centres."

Steiner said Ocado's technology was "dynamic and constantly improving", delivered through "tried and tested" solutions with "proven and attractive" economics.

"Our mission is to deliver the future of online shopping today, and we believe we are succeeding."

Peter Davies, development director for St. Modwen industrial and logistics, added that securing a customer such as Ocado was testament to the quality of his company's scheme, its prime location, and confirmed its commitment to speculatively build out sites where it saw fit.

"Across our parks, we're able to cater to both leading national occupiers as well as small-to-medium-sized industrial and logistics businesses.

"Ocado Retail is a strong addition to our growing list of high-quality customers and the company's developing offering in the south west will bring significant investment in the regional economy and support hundreds of new jobs."