Warehouse robotics group AutoStore is reducing the upfront cost of its technology for customers in a bid to expand sales as the global economy slows and will persevere with its legal battle against UK rival Ocado.
Karl Johan Lier, chief executive of the SoftBank-backed Norwegian group valued at $6.5bn, and his 34-year-old successor Mats Hovland Vikse told the Financial Times in a joint interview that they expected strong growth in warehouse automation to continue even as ecommerce sales stagnate.
“Even though ecommerce and global trade are seeing a downturn, we as consumers will still buy online, and companies will still invest in automation. Only 15-20 per cent of warehouses globally have automation,” said Vikse, who took over will become chief executive on January 1.
AutoStore, whose customers include Ikea, Puma and Gucci, has had a difficult time since its stock market debut in October 2021, losing more than 40 per cent of its value as well as a patent lawsuit intended to stop online supermarket group Ocado expanding into the US.
But Vikse said the company, based in a village of just 400 people in western Norway, was confident that it would follow revenue growth this year of 70-80 per cent to $550mn-$600mn, with another significant jump in 2023 to $700mn-$800mn.
The incoming chief executive, who is currently chief revenue officer and has been at AutoStore since 2017, said it would stick to its litigation against Ocado, including an ongoing case in the UK and an impending one due in New Hampshire at the end of 2023. “It’s important for us to protect our IP,” he said, pointing to AutoStore’s 1,500 patents and patent applications. Ocado has rejected claims that it is infringing AutoStore’s technology.
AutoStore is market leader in cube storage, which uses vertical stacking in warehouses to give much higher volumes and more efficient picking than would be possible with human operators. It has recently launched innovations including adding frozen food to its grocery capabilities and an option for customers to collect goods instore from one of its warehouse systems, which is being used by sports retailer Decathlon in Canada.
Lier, who said he wanted to retire at the age of 62 but stayed on an extra year to complete the IPO process, said the drop in the share price had more to do with uncertainty over the economic outlook and company’s willingness to invest than any of its ongoing litigation problems.
AutoStore has introduced a new way for retailers to buy its systems, which Vikse called “pay per pick”, in an attempt to make it easier for companies to invest by lowering the initial cost. Under the system, a retailer only pays for the automation infrastructure upfront — about 20-30 per cent of the usual total cost — and then pays for everything else including the robots, software and workstations every time they use it.
“You can scale it up as your business grows,” said Vikse, adding that AutoStore was talking to multiple customers about it.
The incoming chief executive stressed that the biggest competition for AutoStore was companies sticking with manual labour for their warehouses.
“If you look at the potential we still have as a company with the low penetration of automation in warehouses, I’m super confident in the future. The long-term potential of AutoStore is very clear. It’s up to us to deliver on that over time,” he added.