Ocado’s latest warehouse fire could actually be “good news” according to analysts

Ocado’s third warehouse fire in as many years could actually be “good news” for the online grocer, as its stock price continues to recover.

Last week Ocado was forced to cancel thousands of orders after three of its automated picking robots collided and ignited, causing a fire at its largest UK facility which took 100 firefighters 12 hours to tackle.

The news sent Ocado’s share prices dropping three per cent to their lowest levels in over a year, as investors feared that news of its robots malfunctioning would deter new partners from buying its technology, now a core part of its business.

Despite this, some analysts have said that the fire could actually be good news for the retailer, as it has proven how much Ocado has improved its safety and damage control features following its devasting fire in 2019.

READ MORE: Ocado cancels thousands of orders as its robots cause another huge fire

The fire at its Andover facility, also caused by one of its robots, completely destroyed it automated fulfilment centre and is thought to have cost Ocado £110 million in damages, while the fire department incurred costs of £132,000 to extinguish the blaze.

Ocado’s Andover site is still being rebuilt two years later, but by contrast Ocado said it would return to normal operations “within the coming week” following its latest fire.

According to Ocado despite being a major fire, the damage was contained to “a small section of less than one per cent of the grid”, largely thanks to its “fire attenuation measures”.

Publicis Sapient’s senior director of retail Andy Halliwell said this was “good news for Ocado in some ways as it demonstrates when the worst happens, their equipment is now hardened against these problems”.

He added: “After the Andover fire, Ocado learned some valuable lessons in how to manufacture their space, racking and robotics to ensure fires were less likely in the first place, were less likely to spread when they happen, and to help minimise damage to the rest of the infrastructure in a worst-case scenario.”

It seems the market largely agrees, helping Ocado’s share price recover from lows of £1731.5 to £1868, higher than its share price days before the incident.

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