Retail Week Indicator 2018: How robots run Ocado’s warehouses

Founder and chief executive Tim Steiner initially struggled to secure international partners in his bid to “pepper the globe” with Ocado’s high-tech automated warehouses.

But the opening of its state-of-the-art customer fulfilment centre in Andover has helped put Ocado on the map, providing a catalyst to secure big-name partnerships with French grocer Casino, Canadian retailer Sobeys and, most eye-catchingly, US giant Kroger.

Ocado’s hugely impressive proprietary technology has made it an attractive partner for such businesses in their fight to fend off the ever-growing threat posed by Amazon.

Speaking to Retail Week last year, Ocado’s tech boss Paul Clarke described its innovative storage and picking system as a “3D chessboard”, upon which hundreds of robots – all developed in-house by Ocado’s tech experts – roam around.

Underneath every square of the chessboard is a stack of totes containing grocery items, which the robots pick up and move.

The machines take totes to the side of the grid, where warehouse workers remove items from the plastic bins and place them into a customer’s basket ready for delivery.

The robots are “spoken to” 10 times every second by Ocado’s patented communication system, which Clarke likens to a “machine-learning-based air traffic control system” that choreographs the most efficient route for the robots to take.

It also ensures they don’t collide with each other and optimises storage within the cube, working out the best spots to replace totes based on upcoming orders.

The catalyst of Amazon and Whole Foods

Ocado had always insisted the technology was a “game changer” in grocery fulfilment but the business initially struggled to pen deals with overseas retailers to license that tech and fulfilment expertise.

The launch of the Andover warehouse – which allowed prospective partners to see the technology in action – plus Amazon’s shock $13.7bn acquisition of Whole Foods changed all of that almost overnight.

It caused what Steiner called “an awakening” across the globe that Amazon meant business in grocery and forced bricks-and-mortar players worldwide to start thinking in a truly multichannel way.

The fact that businesses the scale of Kroger, Casino and Sobeys have all turned to Ocado for help in the battle against Amazon is a testament to its incredible tech prowess.

The business has proven that investment in technology may not always reap instant rewards, but ploughing cash into the right areas and remaining true to your strategy can breed longer term success.