As part of the closures, the intention is to close the fulfilment centre at Fenny Lock, Milton Keynes, which handles the Tesco Direct orders.
Tesco has conducted a detailed review of Tesco Direct, its non-food website, and has concluded that, despite its best efforts, there is no route to profitability for this small, loss-making part of the business.
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.
Charles Wilson, CEO of Tesco UK & ROI, commented: “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.”
Staff were briefed on Tuesday afternoon about the decision to close the website, which many saw as an attempt to take on Argos and Amazon by selling a wide-ranging variety of non-food goods, including toys.
Tesco has been running two separate internet businesses in tandem: Tesco.com for grocery home deliveries and the Direct catalogue-style website for non-food items, including its own F&F clothing brand. The company admitted it couldn’t see a way to make the website, which launched in 2006, profitable, revealing that it is not just bricks and mortar stores fighting online competition.
“I think this shows a renewed focus on the machine that is Tesco,” said Steve Dresser, retail analyst at Grocery Insight. “The days of going after markets with no realistic proposition of them adding value are long gone.”
Tesco is the second major retailer to announce a swathe of job cuts in one day, with Marks & Spencer yesterday revealing plans to close 100 stores by 2022.