Ocado cuts 500 jobs to reduce costs using AI technology

Online grocery giant Ocado recently announced that it will cut 500 positions in its technology and finance divisions, a measure the company has taken to reduce operating costs. As a financially loss-making company, Ocado is leveraging artificial intelligence (AI) technology to boost the productivity of engineering teams in order to cope with financial pressure.

Ocado currently has about 20,000 employees, and the number of layoffs reached 1,000 last year. The company's CEO Tim Steiner said the layoff decision was not easy, and the company's goal was to improve the productivity of engineering teams through AI tools and reduce future R&D spending. Despite the layoffs, Ocado continues to launch a new generation of robotics to customers including Kroger in the United States and Casino in France.

In the high-tech warehouse in Luton, more than one-third of the goods have been selected by robots, and this proportion is expected to reach 70% in the future. Steiner notes that AI not only improves the productivity of robots in warehouses, but also allows companies to reduce recruitment of new employees as sales grow.

However, Ocado's stock price plummeted 17% after the company announced the news, due to disappointment in its tech sales growth expectations, which is expected to grow only 10% this year, compared with 18% last year. Due to delays in construction of two new warehouses in Kroger, Ocado's technical sales have been affected to a certain extent. Nevertheless, Steiner stressed that the U.S. market is crucial to Okado, with almost all required equipment already in the United States, so changes in tariff policies will not affect the equipment configuration of these two warehouses.

Over the past year, Ocado's pre-tax loss was £374.5 million, despite sales up 14% year-on-year to £3.1 billion, with increased profitability offset by impairment of older equipment. In addition, Ocado also encountered difficulties in negotiating the sale of shares with British retailer Marks & Spencer, who said that it would not pay the relevant fees due to failure to meet its performance targets.

In the retail industry, layoffs are becoming increasingly common. Aldi is undergoing a headquarters restructuring, potentially cutting up to 350 positions; Sainsbury's has also announced a 3,000 job cuts, while Tesco will cut 400 jobs.