House of Fraser shelves plans for new distribution hub

House of Fraser has abolished plans for a major new distribution centre after a review of its operations, Retail Week can reveal.

The department store chain, which is owned by China’s Sanpower Group, submitted a planning application for the 750,000 sq ft distribution hub in Peterborough in May this year.

The hub, which Retail Week understands would have been automated, would have created up to 1,000 jobs.

But House of Fraser has now scrapped the plan, it has emerged.

The revelation comes just days after news that chief executive Nigel Oddy is quitting the 167 year-old chain.

Instead, House of Fraser has said it will modernise its existing two warehouses – one in Wellingborough, which deals with online and store stock, and the other in Milton Keynes, which is online only.

In a statement to Retail Week, Oddy said: “We have developed a new five-year plan.

“As part of that, we reviewed our distribution and warehouse requirements, and working with external consultants, identified significant potential for internal efficiencies in our existing business, meaning we do not need a new distribution hub at this time.”

Oddy said in May the hub would have given House of Fraser “additional warehouse capacity to meet future supply chain needs and to meet demand for products from our customers”.

The warehouse was due to be part of the Gateway Peterborough development and planning permission was granted in July.

Rumours have surfaced that House of Fraser has suffered from a lack of investment from its Chinese owners, Sanpower, which acquired the business in 2014.

However a House of Fraser spokeswoman has insisted that Sanpower is “committed to support” the business.

“There is an ongoing dialogue between management and the shareholder on possible capital expenditure programmes,” the spokeswoman said last week.

House of Fraser has suffered an exodus at its executive level in the last year.

Oddy will depart next year, after less than two years in his role, and commercial and logistics director Ray Kavanagh is also understood to be leaving the business.

Chief customer officer Andy Harding also left the retailer earlier this year.

Director of global multichannel trading Martin Francis, clothing and accessories boss Jackie Hay and head of home, food and beauty Ysanne Jenkins have also left the group.

However the retailer has also made some eye-catching hires in former M&S digital director David Walmsley and Asos’s Maria Hollins.

Anonymous#CommentAvatarLabel Commented on: 6 December 2016 17:47
The new warehouse was an extravagance that the business simply did not need.

The wholesale leap in to on line retail has cost the company dearly as it canabilises its stores sales where costs are already tight to produce very small returns .

The bottom line is that on line sales are nowhere near high enough to pay for the significant on costs of delivering market best which is why the investment has been curtailed.

The new 5 year plan will no doubt have been driven by Sanpower who whilst realising that the companies on line ability is important understand that being good enough rather than exceptional leaves them with capital to invest in store growth both in the UK and Internationally as HOFs brand line up gives them an advantage in many countries.

Chewing through the best part of £150m where the majority goes in to on line was never a sensible plan.

Expect a Chinese trusted CEO ahead of either a sale of HOF or a marriage with other retail brands .
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Anonymous#CommentAvatarLabel Commented on: 6 December 2016 13:17
Such a short-sighted strategy that will do nothing to preserve the customer proposition, level of service and long-term 'bottom line' benefit of House of Fraser...clearly a sign that the focus is now purely to survive the immediate short term, it goes a long way to explaining the mass exodus from the HoF boardroom!
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