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Massive automated DC planned by Shop Direct

15 April 2018

Online retailer Shop Direct has announced proposals to upgrade its fulfilment capabilities by creating an automated, 500,000 square foot distribution and returns centre in the East Midlands.

Development of the site at East Midlands Gateway is due to start in May 2018, and the group plans to begin exiting its existing fulfilment sites in Greater Manchester from mid-2020. The new site is expected to be fully operational by peak 2021.

The move is expected to impact 1,177 permanent Shop Direct colleagues and 815 agency colleagues. Redundancies are anticipated as a result of the site closures.

As part of an 18-month project, Shop Direct reviewed its fulfilment sites at Shaw, Little Hulton and Raven, and concluded that limited accessibility, layout and loading restrictions, coupled with a lack of space, mean that these centres won’t meet the group’s future operational ambitions.

The existing fulfilment operation has supported Shop Direct on its journey from a catalogue business to the UK’s second largest pureplay digital retailer, delivering 49m products to customers annually. Very, Shop Direct’s flagship brand, grew like-for-like revenue by 14.6% last year, on the back of 15.9% growth in 2016 and 17.4% in 2015.

For Shop Direct to continue to meet customer demand, the business now needs a new, purpose-built and automated facility in a central, well-connected location, that can accommodate all one-man fulfilment and returns operations on one site, and that provides room for continued expansion.

The space offered by the new site will mean that Shop Direct can process more orders and use new technology to make the business more responsive, reducing 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. Approximately 500 permanent roles will be created at the new site, and this is expected to increase by an additional 200 to 300 agency colleagues during peak periods.

Shop Direct has entered into consultation with Usdaw, the recognised trade union, and will also be consulting with colleague representatives. The group will be working closely with affected colleagues to support them.

Commenting on today’s announcement, Derek Harding, interim group CEO of Shop Direct, 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.

“We take very seriously our responsibilities to our colleagues, many of whom have been with us for along time and who work tirelessly to deliver for our customers. 

"We are working alongside Usdaw, our recognised trade union, and will listen carefully to what they have to say. We’ll also work closely with local authorities and community leaders to make sure this process is carried out as fairly and sensitively as possible for our colleagues.

“We’re announcing this now to give our colleagues the best possible opportunity to prepare for the change. Over the next two to three years, we’ll be partnering with local and national organisations to provide our colleagues with tailored advice and training, including career skills, access to financial planning and vocational courses to support re-training. It’s also our plan to offer apprenticeships in in-demand skills across our existing operational sites.

“Our priority is to provide a fair outcome for our team and we’ll do everything we can to support colleagues through this transition.”