Ocado Slashes 500 Research Jobs as AI Strategy Takes Centre Stage

Ocado Group has announced plans to cut more than 500 research and development positions globally as the company pivots towards artificial intelligence solutions amid mounting financial pressures. The FTSE 250 company’s shares plummeted by 18 per cent following the revelation of continued annual losses and conservative growth projections.

The online retail and technology group reported pre-tax losses of £374.5 million for the year ending December 2024, marking a slight improvement from the £403.2 million loss recorded in the previous year. The job reductions, representing 2.5 per cent of Ocado’s worldwide workforce, will affect both UK and international operations across its eight R&D facilities.

Chief Executive Tim Steiner emphasised that the company had reached the “tail end” of its technology infrastructure development cycle, enabling a strategic shift towards AI-powered solutions. The move is projected to enhance engineering team productivity while steering the organisation towards positive free cashflow by 2026.

The company’s retail division, operating as a joint venture with Marks & Spencer, demonstrated strong performance with revenue climbing 13.9 per cent to £2.68 billion. The retail segment’s underlying earnings saw a substantial increase, rising from £10.4 million to £44.6 million, supported by a growing customer base of 1.1 million active users.

Despite these retail gains, Ocado’s market capitalisation has fallen dramatically from its pandemic peak of £22 billion to £2.78 billion, resulting in its exit from the FTSE 100. The company faces ongoing challenges with its international partnerships, including operational pauses with Kroger in the US and Sobeys in Canada.

Looking ahead, Ocado projects retail sales volume to outperform market expectations, with revenues forecast to increase by more than 10 per cent in 2025. The technology solutions division, however, is expected to see more modest growth of around 10 per cent, with plans to launch seven additional automated warehouses over the next three years.