Shop Direct automation drive puts 2,000 jobs at risk

By

Sandra Halliday

Published
Apr 11, 2018

Shop Direct's new CEO doesn't arrive until later this year, but for now the company is already taking some tough decisions to set itself up for the future under the direction of interim CEO Derek Harding. 

On Wednesday, the online fashion retail specialist announced big news. It's opening a new logistics hub in the East Midlands that will create 500 jobs. The downside to this is that it's going to close three warehouses in Greater Manchester, with almost 2,000 jobs at risk as a result.

The company, which owns the Very and Littlewoods websites, as well as the higher-end Veryexclusive, didn't specify exactly how many jobs would definitely be lost, but said that redundancies are likely. Some 1,177 company employees and 815 agency workers could be affected.

Harding admitted that it was a “tough day for the business” but said that “these proposals are necessary for our future and to enable us to continue to grow and meet rising customer expectations.”

The Liverpool-based company is one of the biggest internet retailers in Britain having started out many decades ago as a mail order catalogue company. Owned by the reclusive Barclay brothers, it put itself up for sale last year but failed to achieve the premium multibillion pound price tag that it wanted.

Not that the business is struggling. Like some other online fashion retailers, it's actually doing rather well and sales rose almost 6% last year to over £1.9 billion. But like the rest of the retail sector, it has to face up to a future in which business may be done very differently from the way it's done now. And that future that will include much more automation, with artificial intelligence (in which Shop Direct has invested heavily) and robotics potentially replacing many lower-paid jobs in the logistics area.

So what will happen now? The Manchester warehouses won't close immediately. The closures will begin in the middle of 2020 with the new East Midlands site opening in the following year.

Although the new site will create 500 jobs, as mentioned, it will be fully automated, which the company said will allow it to respond much more quickly to what consumers want. That means it will be able to process more orders, more quickly and potentially that will create even more jobs in the wider business.