Yahoo Finance Tesco shutting down loss-making website putting hundreds of jobs at risk
Tesco is shutting its loss-making website Tesco Direct, putting up to 500 jobs at risk, the supermarket group announced on Tuesday.
Tesco Direct is the firm’s non-food website, which sells a range of general merchandise, including technology, homeware, clothing and toys.
The supermarket, which recently reported an 800 per cent increase in annual profit, is facing increased pressure from competitors as consumers spending power continues to be squeezed. Discounters Aldi and Lidl continue to grow their market share, and rival Sainsbury’s has taken drastic action in the form of a proposed merger with Asda.
Meanwhile, retail experts pointed to the continued strengthening of Amazon’s position in the global market as the reason behind the decision to shut Tesco Direct.
Martin Lane, managing editor of money.co.uk, said: “Yet another retailer has succumb to the pressure of retail giant Amazon. Tesco Direct shutting ... suggests not even key players are safe in the current climate – it’s not just the high street suffering.”
Tesco said: “Tesco Direct has faced a number of significant challenges, including high costs for fulfilment and online marketing, which have prevented it from delivering a sustainable offer as a standalone non-food business.”
The decision means the company’s Fenny Lock fulfilment centre will be closed when Tesco Direct stops trading on 9 July, which puts 500 employees at risk of redundancy.
The company said closing Tesco Direct was part of a wider ambition to “create a simpler online experience for customers, allowing them to purchase general merchandise, clothing and groceries all in one place”.
Charles Wilson, CEO of Tesco UK & ROI, said: “We want to offer our customers the ability to buy groceries and non-food products in one place and that’s why we are focusing our investment into one online platform.
“This decision has been a very difficult one to make, but it is an essential step towards establishing a more sustainable non-food offer and growing our business for the future.”
Joanne McGuinness, national officer at Usdaw, the union for shop and distribution workers, said the closure of Tesco Direct would be “devastating news” for staff.
“Usdaw officials and senior reps will now enter into consultation talks with the company where we will look closely at the business case for the proposed closure,” she added.
“Our priorities will be to support, advise and represent our members through this difficult period, and to get the best possible deal for them.”
Tesco is the second major retailer to announce a swathe of job cuts in one day, with Marks & Spencer earlier revealing plans to close 100 stores by 2022.
