Digital retailer Shop Direct is to close three fulfilment centres in Shaw, Little Hulton and Raven, in Manchester, in mid-2020.
The facilities will be replaced by a new automated warehouse that is being developed at SEGRO’s East Midlands Gateway.
The new facility will be 500,000 sq ft. The cost, including the acquisition of the land, development and site closures, will be around £200m in total.
Shop Direct, which owns e-tailers Littlewoods and Very.co.uk, said that the decision to close the facilities was determined by an 18-month review project, from which it concluded that its three Manchester sites had “limited accessibility, layout and loading restrictions, coupled with a lack of space, meaning that these centres won’t meet the group’s future operational ambitions.”
The retailer’s main current facility is its distribution centre in Shaw, which comprises three former Victorian mill buildings of more than 950,000 sq ft. The company has operated out of this space since 1979 and today it processes the majority of Shop Direct’s smaller parcels and multiple items. The property is owned by The Barclay family, which owns Shop Direct.
The Barclay family also owns the company’s return centre, in Raven, which is also a former converted Victorian mill and is 250,000 sq ft. The business has operated its returns out of this property since 2003. The Barclay family has yet to reveal any plans regarding the future of these assets.
Shop Direct’s second distribution centre in Little Hulton processes larger singe orders such as furniture. It comprises 330,000 sq ft and Shop Direct have occupied the property, which is owned by Logicor, since 1998.
The closures will put the future of 1,177 Shop Direct employees and 815 agency workers in doubt and the company has confirmed that redundancies are likely.
The existing fulfilment operation has supported Shop Direct on its journey from a catalogue business to the UK’s second-largest digital retailer, delivering 49m products to customers annually. Very, Shop Direct’s flagship brand, increased its like-for-like revenue by 14.6% last year, on the back of 15.9% growth in 2016 and 17.4% in 2015.
The company said that the new facility was necessary in order to meet customer demand and that it needed a “well-connected location, that can accommodate all one-man fulfilment and returns operations on one site, and that provides room for continued expansion”.
The new site at East Midlands Gateway will provide new technology in order to make the business more responsive and reduce the time it takes to get products to customers.
The site’s position in the East Midlands, adjacent to the M1 and East Midlands Airport, with its own rail freight terminal, will enable the business to increase its cut-off time for next-day delivery to midnight from the current 7pm, and to explore the introduction of same-day delivery in the future.
Interim group chief executive officer Derek Harding said: “This is a tough day for the business and we know how difficult this news will be to hear for our teams in Shaw, Little Hulton and Raven. However, these proposals are necessary for our future and to enable us to continue to grow and meet rising customer expectations.”
The company is headquartered in a Palmer Capital owned office in Liverpool, Skyways House, which is unaffected by the closures.
Construction at the new facility is due to begin in May this year with completion expected by 2021.
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