Online grocer Ocado has announced plans to shut its oldest distribution centre as it shifts towards robotic warehouses, in a move that will affect around 2,300 workers.

The group said it will close the site in Hatfield, Hertfordshire, which accounts for about a fifth of its 400,000 customer orders each week, later this year.

The orders will instead be shifted to a new state-of-the-art automated warehouse in Luton, which is due to open in the autumn.

Ocado Retail – run as a joint venture with Marks & Spencer – has now started consultation with the 2,300 workers based at Hatfield, but said it aims to offer jobs to as many of those affected as possible at nearby sites, including Luton.

We want to keep as much of this talent and experience within the business as possible and expect to retain a large proportion of colleagues impacted by these changes

The new site in Panattoni Park, Luton, is more than 20 miles away from the Hatfield warehouse.

Ocado is expecting to employ around 1,000 staff in total at the new distribution centre.

It is also retaining its group headquarters and Ocado Retail head office in Hatfield.

Ocado Group chief executive Tim Steiner said: “As the online grocery channel grows, our new, enhanced fulfilment centres and technologies will drive a step change in customer experience and efficiency.

“With this capacity coming online, now is the right time for us to halt operations at our oldest facility at Hatfield and consider our future options for the site.”

He added: “We want to keep as much of this talent and experience within the business as possible and expect to retain a large proportion of colleagues impacted by these changes, either in our new Luton CFC (customer fulfilment centre) or across our wider UK network.”

Energy Secretary Grant Shapps, who is the local MP for Welwyn Hatfield, said he was “shocked” by Ocado’s plans to close the site in Hatfield.

He said: “Ocado has been an important employer in the area for many years.”

“I will be speaking to the company today to better understand their next steps,” he added, stressing he would be “working with the company and constituents to ensure impacted employees have the support they need to stay at Ocado or find new work locally”.

Ocado said its new robotic warehouses can pick well over 200 items an hour, compared with around 150 for its original Hatfield site.

It added that the newest warehouses also use less energy.

The firm hopes that the shift towards these automated sites will drive better customer experience and boost its ability to offer same day deliveries.

Ocado has seven warehouses across the UK, before the launch of the Luton site, with many more overseas.

It employs more than 19,700 people, including just over 14,290 across the UK in the logistics business.

The firm revealed in February that losses widened across the group to £501 million in 2022 from £177 million in 2021, with its retail business swinging to an underlying loss of £4 million.

It was hit by a cutback in customer spending per shop as well as soaring cost pressures, which took their toll on its bottom line.

The business said recently that its retail business remains on track to return to profit this year after a 3.4% rise in first-quarter sales.