Ocado to spend £5m on pay rises and bonuses for HGV drivers due to shortages

Supermarkets

Ocado is to spend up to £5 million extra this year in pay rises, recruitment and signing-on bonuses for HGV drivers.

The online grocer said the shortage, caused by Brexit and the Covid-19 pandemic, has become “an increasingly important issue for the industry” and that it will try to mitigate costs where possible.

Bosses also revealed they will face a further £10 million hit this year due to a fire at the company’s warehouse in Erith, south-east London, in the summer which led to around 300,000 customer orders worth £35 million being cancelled.

READ MORE: Ocado opens 2nd-largest hub in bid for 600k weekly orders

Sales fell 10.6 per cent to £517.5 million in the 13 weeks to August 29, in part due to the fire but also because of strong comparisons last year at the height of the pandemic.

The company said the period should be looked at in two distinct halves and that sales were only down 1.8 per cent in the first six weeks – before the fire.

The following seven weeks saw sales down 19 per cent.

It was the third fire to hit an Ocado warehouse in three years, with its site in Andover, Hampshire, only recently returning to full operation two years after a blaze.

Despite the falls, Ocado said it signed up 64,000 new customers during the period, with 805,000 in total, and orders per week rose 22 per cent.

However, the average basket size was down 12 per cent to £124 compared with £141 a year ago.

Bosses are confident the company can continue its strong growth, announcing that capacity at its warehouses in Hatfield, Hertfordshire, and Dordon, Warwickshire, have increased, allowing 600,000 orders a week to be completed.

They also announced plans to open two new warehouses in Luton and Bicester, which will allow the company to increase capacity to 700,000 orders per week.

“Despite the challenges we faced in the period, I am delighted to report that Ocado Retail is performing well, improving the customer experience even further and continuing to grow the business in a post-lockdown environment,” Ocado Retail chairman Tim Steiner said.

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