Ocado has admitted it may have to increase driver pay rates to prevent a repeat of this year’s shortages.
The online grocer was forced to raise hourly rates earlier this year in certain areas to tackle problems with recruitment, which stifled growth in the latest quarter.
And chief financial officer Duncan Tatton-Brown said Ocado may have to continue to revise salaries in “tight labour markets” such as London and the south east to meet growing customer demand.
In a trading update issued this morning, Ocado said retail sales were up 11.6% in the 14 weeks to 3 December to £373.8m. But it said sales would have grown even more strongly if there had not been a shortage of drivers.
Tatton-Brown said he was confident the company could avoid a repeat of the shortages.
“Did we have some issues? Yes, but we recruited and changed the way we operate and also frankly increased pay rates in certain locations and the issue is resolved,” he told The Grocer.
“Probably we will have to increase pay in certain locations.There are more people buying products online, and more retailers are serving customers online than there ever used to be and that’s creating more demand.”
Tatton-Brown added that Ocado needed to be picky in its recruitment, rather than simply hiring people with driving skills. “We call our drivers customer service team members because they need customer service skills first. They are our point of contact with customers so we try to recruit people who are suited for that.”
The finance chief added that Ocado consistently had more demand than it could satisfy, especially in the run-up to Christmas. “We’re expecting a record Christmas but let’s be clear, we don’t have the capability to serve the demand we have,” he said.
Ocado is continuing to increase its fulfilment centre space and its Andover facility in Hampshire, which opened at the tail end of last year, is now running at about 25% capacity. Management expects the centre to run at full capacity - equating to roughly 65,000 orders a week - by the end of 2019.
Next year, Ocado will open a new fulfilment centre in Erith, south-east London, which will be capable of processing 140,000 orders a week.
No comments yet