Amazon, the online retail giant, has announced plans to close three warehouses across the UK as part of an overhaul of its network.
Sites in Hemel Hempstead, Doncaster and Gourock in Inverclyde have all been slated for closure by Amazon, which revealed plans to increase employee layoffs to 18,000 from 10,000 last week.
At the same time, it has proposed launching two new warehouses at sites in Peddimore, near Sutton Coldfield in the West Midlands, and Stockton-on-Tees, County Durham.
Staff at the UK warehouses touted for closure will, according to the group, be offered roles at other Amazon centres, with the two new ones creating over 2,500 jobs.
A spokesman for the company said: “We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees and customers.
“As part of that effort, we may close older sites, enhance existing facilities or open new sites, and we’ve launched a consultation on the proposed closure of three fulfilment centres in 2023.
“We also plan to open two new fulfilment centres creating 2,500 new jobs over the next three years."
Amazon has more than 20 fulfilment and distribution centres in the UK. The properties it is looking to axe are at Boundary Way in Hemel Hempstead, Balby Carr Bank in Doncaster and Faulds Park in Gourock, totalling around 1.2 million square feet, according to CoStar data.
Grant Lonsdale, director of market analytics at CoStar, said: “Given that Amazon had reached full capacity in the UK, the plan to close these older sites is perhaps unsurprising, particularly since the company has been rolling out smaller ‘new concept’ distribution hubs in last-mile locations alongside its regional fulfilment centres.
"It is also important to note that the 1 million square feet or so earmarked for closure represents a fraction of the 25 million square feet the company acquired following the onset of the pandemic.”
Last week, Amazon announced that it was increasing the number of staff it was planning to let go due to the slowing of the economy. The move was shared in a statement from chief executive Andy Jassy after it was leaked by an insider.
Andrea Ferranti, head of industrial research at Colliers said: “While online sales remain elevated, compared to pre-pandemic figures, overall retail sales are reducing and the challenging macro-economic environment is impacting negatively on the performance.
“With the surge of inflation, labour costs and dwindling labour supply challenging businesses’ operating margins I would expect more companies to look at consolidating their warehouse operations to drive efficiency over the short to medium term.”
Amazon added millions of square feet of warehouse space and hired tens of thousands of employees to meet a surge in online spending and home deliveries during the pandemic.
However, the e-commerce giant started scaling back the expansion of its vast warehouse and fulfillment network early last year. Labour and energy costs rose and revenue declined as consumers reduced online spending.