Ocado prays burned warehouse not to extinguish its hopes for a future in high technology | Business

TheOn Tuesday morning, Ocado boss Tim Steiner overflowed with confidence, explaining to the city's investors that his robotic warehouses could revolutionize food shopping and transform the way baggage rides, car parks and even ports work. .

However, while Steiner was making his presentation at the Goldman Sachs office in London – where he was working as a bond dealer in the 1990s – about 70 miles to the west, a key part of Operation Ocado was about to go up in smoke.

In the early hours of the day, a fire broke out in the company's main warehouse in Andover, Hampshire. The wild flame burned for 48 hours, it took 200 firefighters to control it, and the 45 million-pound building was reduced to a twisted, smoldering mbad.

Ocado had to abandon more than 4,000 deliveries that typically leave the Andover deposit every day in its distinctive vans sporting gourmet emblems. but the fire has done more than spoil the Sunday plans for Winchester and Salisbury customers.

Although Ocado's share price recovered on Friday, more than GBP 1 billion was removed from the technology-based retail company's stock market value. Investors feared that retailers, who were queuing up to buy its automated warehouse technology, are frightened by the vulnerability exposed by the fire.

"Ocado is a remarkable company that has led a lovely life," says Shore Capital badyst Clive Black, who, before last week's setback, was skeptical about a company that has invested big sums in a series of high-tech warehouses without generating significant profits. investors.

Andover was not just any old warehouse; it was the prototype of Ocado's robot dream. The footage released at the opening of the building in 2016 showed an army of 600 robots swarming around a 3D frame called "grid" to locate goods, from baked bean cans to toilet paper rolls . Traveling at four meters per second, robots can execute a typical command in about five minutes.

The Andover warehouse is the third stage of the company's thinking. While its first two – in Hatfield, Hertfordshire and Dordon, Warwickshire – relied on humans to load crates that pbaded on conveyors, in Andover, robots were at the center of a storage system. Automated marketed by retailers around the world under the name Ocado Smart Platform.

After spending nearly 10 years as a poorly-traded public company, Ocado was powered into the FTSE 100 last year after Steiner finally sold his multi-store picking expertise. foreign retail chains. One of the most ambitious contracts is the construction of 20 warehouses for the American giant Kroger.

Steiner found himself at the helm of the newly-crowned "Microsoft of retail", having chaired the UK's shortest share of the market, where investors were betting on falling stock prices. The euphoria has seen Ocado shares climb to £ 11.63, valuing activity to over £ 8 billion and reporting to Steiner, who holds a 3.4% stake, a spot in the annual rankings . Sunday Times rich list.

Steiner founded Ocado with colleagues from Goldman Sachs, Jonathan Faiman and Jason Gissing in 2000, but is the only one to have stayed the course. Before the disaster last week, he was also considering another coup with the news that Ocado was in talks with Marks & Spencer, who has not yet decided to sell food in line.

"The main interest of the smart platform is that it is more agile, and Andover is the centerpiece," says Black, adding that there had been doubts about the point of whether the technology behind the operation would ever become a full-fledged salesman. . Its automated processes have been less efficient than expected and battery-powered robots are prone to problems, he said.

At the time of the fire, Andover, which manages around 10% of Ocado's annual UK sales, was £ 1.5 billion. So he was halfway to the goal of processing 60,000 orders a week. Ocado warned investors that its closure would affect sales in the coming weeks, but other deposits, including its new site in Erith, southeast London, will take over as far as possible.

Investigators have now begun to identify the source of the fire and Ocado shareholders will want to know if he is blamed for a design flaw in his technology. Firefighters complained that the dense structure in which the fire was installed was designed for robots rather than for humans.

Bruno Monteyne, an badyst at Bernstein, says the big question is what the incident will mean for Ocado's technology branch, but he's optimistic: "Even though the retail business will be significantly affected , we see no reason to consider this as a major setback for the Ocado technology sector. "

Even though the robots are exempt, the Andover disaster is a major puzzle for Steiner in a year that must have already been impressive. Last year's numerous contracts mean that Ocado engineers are simultaneously managing warehouse projects in the United States and continental Europe and are looking for a fifth site in the UK. Steiner also needs to enter into a new supply agreement with Waitrose (the current agreement comes to an end in 2020) or find a big name like M & S to replace it.

"The future of Ocado depends on the Kroger contract, and the market gives perfect prices," says Black. "For me, there is some irony in the fact that the smart platform [in Andover] which is the backbone of Ocado's export offer – and which has not been proven in the UK – is now in ashes. "