Amazon to sublet UK warehouses as growth plans go awry

Amazon is aiming to shed empty warehouses across Britain as it slams the brakes on growth plans after falling to its worst annual loss on record.

Amazon is understood to have kicked off work to sublet unused big-box sites in Britain, following years of swooping for more warehouse space across the country. It is estimated to have opened hundreds of warehouses globally during the pandemic, in a bid to make the most of the boom in online spending.

However, demand from shoppers for online orders has taken a hit in recent months, with 2022 having been the toughest year for many ecommerce giants to date.

It is thought that one Amazon facility which it has been fitting out in Bracknell is among those it is looking to offload. LinkedIn posts from contractors suggest the Bracknell site – a potential delivery station – was being kitted out as recently as six months ago. 

Amazon is not expected to look at subletting warehouses which it is currently using, and instead those which it had taken but had not moved into. 

Amazon said it did not comment on rumour and speculation. 

The news of the plans comes in the wake of a wider review of operations in the UK, which resulted in the US tech giant announcing earlier this year that it would be shutting three warehouses in the country, putting 1,200 jobs at risk. It is also closing seven delivery stations in England. 

Amazon had said at the time that it was “always evaluating our network to make sure it fits our business needs and to improve the experience for our employees and customers”.

The company is also in the midst of reviewing its footprint in the US, and last year was reportedly also looking at subletting warehouses in America. Bloomberg suggested it had at least 10 million square feet of space in the US which it was aiming to sublet. 

It marks a turning point for Amazon, after years of major expansion as the retailer looked to make the most of the surge in online sales during Covid. 

Amazon hired 25,000 people in the UK in 2021 – 15,000 more than it had planned – as it raced to find workers for its warehouses and delivery teams. It had around 70,000 people working for it in the UK last year. 

However, a global downturn in spending – and pressure on online stores as shoppers flock back to high streets – has dealt a blow to online retailers.

Amazon revealed on Thursday that it had slumped to its worst ever annual loss since it went public. It has shed around 30pc of its value over the past year, amid concerns over spiralling inflation and as investors brace for a recession. 

It is in the middle of cutting around 18,000 roles from its global workforce, most of which are said to be within its Amazon Stores and in HR and recruitment. 

The cut-backs by Amazon come amid signs that January proved to be particularly tough for retailers, with Adobe figures showing that shoppers spent around 27pc less online last month than they did in December. 

As customers feel the pinch on their wallets, more are opting to buy in stores to see items before they take the plunge. It has sparked a resurgence on some of Britain’s best-known high streets, such as Oxford Circus where more than 3 million square feet of space is either being developed into new stores or offices or is in the pipeline to be developed. CBRE, who compiled the data, said it was experiencing significant interest in properties on the iconic high street. 

Meanwhile, Amazon has started scaling back its bricks and mortar footprint, closing a raft of electronics and book shops in Britain and the United States after struggling to lure shoppers through the doors.

Sales growth has slowed at its physical stores over the past year, despite the return of customers back onto the high street. It has also recently been hit by its first ever strike action in the UK, with workers walking out at its warehouse in Coventry.

Amazon said at the time that a tiny proportion of its workforce had been involved and that it was “proud to offer competitive pay”.

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