Shares in pureplay grocer and technology firm Ocado dropped as markets opened on Friday, after major international partner Kroger said it would take a “hard look” at its automated warehouses.
Ocado launched a partnership with Kroger back in 2018, and initially the two retailers agreed to build the equivalent of 20 automated customer fulfilment centres across the US. However, to date, only eight of the promised sites have been completed.
A further two are expected to open in the current financial year.
However, Kroger bosses told investors in the US overnight that they were reviewing their use of automation technology, in a bid to reduce costs and improve profitability, according to the Press Association.
Kroger interim chief executive Ron Sargent said it was conducting a “full site-by-site analysis” of its warehouse and distribution network. It said it would focus instead on fulfilling orders from stores to improve speed and efficiencies.
“Where we have seen strong demand in high-density areas, these facilities deliver better results than those facilities where density is lower and customer adoption has been slower”, Mr Sargent said.
“We are taking a hard look at some of our automated facilities.”
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