Next to invest £300m in UK logistics as new warehouse set to deliver £2.5bn boost

Next has unveiled a major expansion of its UK logistics network, committing more than £300 million to new warehouse infrastructure in a move it says could deliver a £2.5 billion boost to the wider economy.

The FTSE 100 group has secured planning permission for a new 1.2 million square foot distribution centre at its Elmsall complex in West Yorkshire, with construction expected to begin in 2028 and the facility set to become fully operational early in the next decade.

The investment marks a significant step in Next’s strategy to scale its domestic operations and support continued growth in online sales, which have outpaced expectations in recent years.

The retailer plans to spend £307 million on logistics over the next three years, as it responds to a sustained surge in digital demand. Web sales have grown by 28 per cent over the past two years, far exceeding the company’s earlier forecast of 10 per cent.

The expansion is designed to increase capacity, improve efficiency and support faster delivery times, positioning Next to compete more effectively in an increasingly digital retail environment.

While UK sales grew by a comparatively modest 7 per cent last year, international sales surged by 35 per cent, highlighting the importance of strengthening domestic infrastructure to support long-term growth.

The announcement comes alongside robust financial results, with pre-tax profits rising 15 per cent to £1.2 billion for the year to January 2026.

Investors responded positively, with Next’s share price rising by as much as 6 per cent following the update, reflecting confidence in both the company’s performance and its forward investment strategy.

Alongside physical infrastructure, Next is also increasing its use of artificial intelligence across key areas of the business, including customer service, product development and software engineering.

Chief executive Simon Wolfson said the company sees AI as a tool to enhance productivity rather than replace workers.

“AI will change people’s jobs rather than replace them, making them much more effective and removing tasks they enjoy least,” he said.

The retailer is not yet deploying AI within its warehouse operations, but Wolfson indicated that the technology could play a significant role in future logistics planning, particularly in demand forecasting and inventory optimisation.

“AI is perfectly placed to help support those decisions,” he said, noting its ability to analyse large datasets and model different scenarios.

The investment comes at a time when retailers are facing rising cost pressures, including higher energy prices linked to global geopolitical tensions.

However, Wolfson dismissed the idea that businesses should seek government bailouts, arguing that public finances are already under strain.

“We’ve got to recognise the government hasn’t got a lot of money spare,” he said. “Asking for support at a time like this is problematic.”

Next estimates that its logistics expansion will contribute £2.5 billion to the UK economy, through a combination of direct investment, job creation and improved supply chain efficiency.

The development is also expected to strengthen the UK’s retail infrastructure at a time when e-commerce continues to reshape consumer behaviour and industry dynamics.

The company’s strategy reflects a broader trend among major retailers, who are investing heavily in logistics and technology to adapt to a rapidly evolving market.

For Next, the combination of strong financial performance, expanding digital demand and targeted investment in infrastructure provides a foundation for continued growth.

As the retail sector navigates cost pressures and shifting consumer habits, the success of such investments will be critical in determining which players can maintain their competitive edge in the years ahead.

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Next to invest £300m in UK logistics as new warehouse set to deliver £2.5bn boost