Ocado the leading online grocer has today revealed plans to axe 500 jobs in its technology and finance divisions as part of a wider plan to cut costs with the help of artificial intelligence. This move is largely because the company is seeking to enhance its productivity through the use of AI tools in research, engineering, and operations. The company currently has about 20,000 employees, and this reduction is a follow up to the previous reduction of 1,000 employees in the last financial year.
Ocado’s technology group, which has developed pioneering robotic picking and delivery systems, creates sophisticated solutions for online retailers all over the world. Chief Executive Tim Steiner explained that the decision was made because the business had to achieve cash flow targets and that AI would enhance the effectiveness of their engineering team, enabling the company to decrease its research and development expenses. Software development is a less labor-intensive function than hardware development and is where the company is placing its focus.
In addition, to improving the efficiency of its robots in its warehouses, AI is also helping Ocado. In its Luton warehouse, more than one third of items are now being picked by the robots and the company expects to see this rise to 70% in the near future. This technological shift has meant that although sales are growing, there are now fewer new workers needed, thus highlighting Ocado’s strategy of relying on automation and AI for growth.
Nevertheless, the news has been negative for Ocado’s stock, with the shares falling 17%. The company also reported a pre-tax loss of £374.5 million for the year even though its sales rose by 14%. As it moves through a technological transition, the company is moving forward with its investment in AI and automation for future growth.
