Tesco Direct Crashes

23rd May 2018.

Tesco is shutting down its clothing and homewares website Tesco Direct in a surprise move that puts 500 jobs at risk.

In a surprise turn for online retailers, Tesco is closing down its clothing and homewares website, Tesco Direct. This will put hundreds of households at risk as workers will be forced to find alternative employment. The website was an attempt by the food retailer to compete with the online power of competitors such as Argos and Amazon.

Since the retail apocalypse began its culling at the end of last year, retailers have perceived technology and the building of an online presence as the easiest route to prosperity. The failure of Tesco Direct highlights the flaw in this sentiment, with Tesco struggling with the high cost of online deliveries and marketing. Adapting business to the digital customer is still the correct opinion but it should be explored only with the strong cash flow to back it up.

At the Credit Protection Association, our members approach us when they want to pursue expansion opportunities within their business. We chase down unpaid invoices and late payers and provide our members with the financial freedom they did not have before.

Tesco admitted it couldn’t see a way to make the website, which launched in 2006, profitable. As a result the retailer said approximately 500 staff were at risk of redundancy.

“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,” said Charles Wilson who recently took over as boss of Tesco’s UK chain. “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 has been running two separate internet businesses in tandem: Tesco.com for grocery home deliveries and the Direct catalogue-style website for household goods and clothing, including its own F&F brand.

It is important that British businesses embrace new technologies and modern concepts, but only if they have the financial power to support maintenance.  It is not merely about purchasing new equipment or purchasing a new website URL, it is about hiring the right people to manage it and make it a success. Tesco wanted to keep pace with rivals but struggled when the longterm costs of online marketing took a toll on the retailer’s finances.

At the Credit Protection Association, our services not only provide extra cash to our members but provide the advice on how to correctly utilise it. Our debt recovery services provide financial freedom, while our credit management products provide the tools to reign it in.

If you are considering pursuing growth and expansion opportunities within your business, come to CPA and we can talk you through it!

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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