Tesco has finally waved the white flag on its attempt to take on the might of Amazon and Argos by pulling the plug on clothing and homeware site Tesco Direct, 12 loss-making years after the business first launched.
The supermarket giant has admitted it cannot work out how to make the site profitable, and 500 staff could now be made redundant. All products on the site will now be available through Tesco.com, the grocery shopping website.
Tesco said the website, which will cease trading on 9 July, had struggled with the high cost of fulfilling orders and online marketing. Its distribution centre in Milton Keynes, which handles Tesco Direct orders, will now shut.
UK chief executive Charles Wilson said: “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.
“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.”
Tesco Direct was set up in 2006 by former CEO Sir Terry Leahy as part of the retailer’s expansion plans, which also included Tesco Bank. This growth strategy was beefed up under his successor, Philip Clarke who snapped up South Korean chain Homeplus, restaurant chain Giraffe, video on demand service Blinkbox and launched Tesco Broadband and Tesco Opiticians.
However, all these divisions have now been sold off under current boss Dave Lewis, as part of plans to get back to basics.
Grocery Insight retail analyst Steve Dresser said: “I think this shows a renewed focus on the machine that is Tesco. The days of going after markets with no realistic proposition of them adding value are long gone.”
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