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Online grocery retailer Ocado has announced strong trading results for the year 2017.

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Online retailer Ocado has announced the appointment of Luke Jensen to the board as executive director.

The Ocado Solutions chief executive will take up his new position at the beginning of March.

Key experience

Luke Jensen joined Ocado in February 2017. He previously held the role of group development director at Sainsbury's, where he was responsible for all online and digital activities. During his year with Ocado, Jensen has overseen the progress of international partnerships, and has been responsible for the management of the retailer's relationship with partner Morrisons.

International partnerships

Acknowledging his new position, Jensen implied that plans are in place for further international partnerships. He said "My first year has been transformational for the business and I look forward to growing the Ocado Solutions business and to welcoming more major grocers to our expanding list of international partners powered by Ocado Smart Platform".

Ocado has already secured three international partnerships for the Ocado Smart Platform in the last year. The retailer announced an agreement with an unnamed partner last June, and in the last three months Ocado has partnered with French supermarket Groupe Casino and Canadian grocer Sobeys.

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Ocado has announced a partnership with Sobeys to develop its online grocery business in Canada.

This is Ocado's first venture into North America, and the third international partnership for the Ocado Smart Platform.

Exclusive partnership

Sobeys is Canada's second largest food retailer, generating sales of C$23.8 billion in 2017. It operates more than 1,500 stores across the country under brands including Sobeys, Safeway, FreshCo, IGA and Thrifty Foods. Ocado will allow Sobeys to use its ecommerce platform to expand its online business into Ontario, building on its successful ecommerce business in Quebec. This will include front-end website functionality, last-mile routing management technology and the construction of Ocado's latest generation automated warehouse. The Andover style robot warehouse will be built in Toronto over an estimated two-year time frame. Ocado will also consider developing more centres in dense urban areas in the future.

Although Sobeys will pay an initial fee to Ocado for its services, the transaction is expected to be earnings-neutral in the current financial year due to the cost of establishing the partnership offsetting the initial fees payable. Nevertheless, the deal is expected to create significant long term value for Ocado, with further fees payable by Sobeys linked to future capacity and performance. Profitability is expected to grow as of 2019.

Source: IGD Research

Momentum growing in the Canadian grocery ecommerce channel

The development of this facility aligns with the timescales for ecommerce development outlined by Sobeys last year. It is currently into the second year of a three-year turnaround plan, Project Sunrise, and is prioritising embedding a new functional-led structure and launching its discount format into Western Canada. Although the retailer has indicated that it has time to develop its ecommerce strategy, given the relatively slow pace of channel development in Canada, Loblaw's recently launched partnership with Instacart and Amazon's acquisition of Whole Foods Market last year have potentially shortened timelines for development. Metro is expected to launch its ecommerce operation in Toronto later this year while Walmart has partnered with Penguin Pickup to develop its online grocery business in the city.

International expansion

Ocado's role as a provider of retail technology has recently gained momentum. The Sobeys partnership is Ocado's second international deal in two months, following its tie-up with French supermarket Groupe Casino late last year. The retailer also announced an agreement with an unnamed partner last June.

Tim Steiner, chief executive of Ocado, said "We are delighted to be working with one of the leaders in North American grocery retailing. Sobeys is a highly successful and much admired Canadian business and we are proud that they have chosen Ocado Solutions to partner with to build their online grocery business".

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Online grocery specialist Ocado is working with four academic institutions to develop a humanoid robot capable of assisting its warehouse maintenance technicians.

The move to robotics is part of Ocado's plans to reduce reliance on human workers.

A second pair of hands

The ARMAR-6 robot prototype, dubbed SecondHands, has been designed to assist engineers. Using artificial intelligence, SecondHands will predict the technician's needs and fetch tools,as well as interpret human actions and make decisions regarding how best to help. The prototype moves via a wheeled base, and uses to cameras to locate and grasp objects. Graham Deacon, robotics research team leader at Ocado, said the aim is to develop "a fluid and natural interaction between robot and technician".

Improving productivity

Ocado has previously experimented with artificial intelligence aimed at automating elements of its business, showing how robot-human partnerships can speed up and improve productivity in the work place. Last year Ocado released footage of its 'soft manipulation project', a venture that planned to use a robotic arm to handle fragile and potentially dangerous goods such as fruit and bleach. The retailer also announced that it had trialled self-driving delivery vehicles.

SecondHands robots could be installed into Ocado warehouses as early as 2025.


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