Customers are reducing their use of delivery for online grocery shopping orders, prompting Ocado to consider a shift in expansion plans for the service in the U.K.
Ocado CEO Tim Steiner said the recent opening of its new facilities in Bicester and Luton in England gives the company “a lot of capacity to grow into.”
While Ocado’s expansion timetable is being slowed, plans for fulfillment centers already on tap are moving forward, Steiner said, the Financial Times reported on Thursday (July 21).
Top sales during the pandemic were held back by the company’s inability to boost warehouse capacity and now it is hurt further as people make their way back to the pre-pandemic norms of shopping for groceries in person.
Since Japan’s Aeon in December 2019 Ocado has not signed a new client for its tech, Steiner said, per FT. But the company said it is busy negotiating with possible corporate clients and its technology is getting some chatter.
See also: Grocers Expand Direct Delivery to Cut Out Last-Mile Middlemen
Kroger has been opening automation-powered customer fulfillment centers (CFCs) in partnership with Ocado as part of its “hub-and-spoke” model. The move is intended to have larger distribution centers (hubs) send items to smaller facilities (spokes)in order to fulfill consumers’ orders, PYMNTS reported last month.
Ocado’s eCommerce collaboration with Marks and Spencer has seen a fall-off in sales of 8% in the first half of this year, FT reported.
“We are clawing back market share,” Steiner told FT, adding that lower per-customer buys meant Ocado Retail had to step up its game to win new customers.
Read more: 58% of Consumers Increased Online Grocery Shopping in Past Year
A PYMNTS report with Riskified last month showed that close to 60% more shoppers went for groceries online rather than in person in the past 12 months in the U.S.
The report indicated that 61% of Generation Z shopped for more goods online and 52% bought more groceries through eCommerce channels.
Related: One in Six Consumers Orders Grocery Delivery Every Week
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