Tesco is to close a call centre in Cardiff, putting 1,100 jobs at risk.

The supermarket chain said that in February it planned to close one of its two call centres which handle customer emails, social media inquiries and phone calls. About 250 jobs will be created in the group’s other call centre, in Dundee, which will handle all customer queries. Workers from Cardiff will be offered work there but few are expected to move.

Nick Ireland, the divisional officer of Usdaw, the shopworkers’ trade union, said workers in Cardiff were “understandably shocked” by the announcement.

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“This is clearly devastating news for our members and will have a wider impact on south Wales, as so many jobs are potentially lost to our local economy.

“We will now enter into consultation talks with the company over the coming weeks to look at the business case for the proposed closure. Our priorities are to keep as many members as possible in employment, whether that is with Tesco or other local employers, and to get the best possible deal for our members.”

Andrew RT Davies, leader of the Conservatives in the Welsh Assembly, said: “This could be the biggest single loss of jobs in Wales since 2009, and will be a huge blow for the employees and their families and the South Wales economy.”

Matt Davies, the UK chief executive of Tesco, said: “The retail sector is facing unprecedented challenges and we must ensure we run our business in a sustainable and cost-effective way, while meeting the changing needs of our customers.

“To help us achieve this, we’ve taken the difficult decision to close our customer service operations in Cardiff.

“We realise this will have a significant effect on colleagues in the Cardiff area, and our priority now is to continue to do all we can to support them at this time.”

Retailers are having to rethink their businesses in the face of aggressive online competitors as well as higher costs after a hike in the national living wage from £7.20 to £7.50, recent business rate changes and the introduction of the apprenticeship levy.

Lewis said last year that retailers faced a “potentially lethal cocktail” as profits slump and costs rise.

Rising competition from the discounters Aldi and Lidl has also forced traditional supermarkets to hold down prices at a time of rising costs resulting from the fall in the value of the pound against the euro and the dollar.

The cuts at Tesco are the latest in a string of cutbacks implemented as part of a turnaround plan led by Dave Lewis, the group chief executive, who joined in autumn 2014.

In his first year in charge, Lewis axed nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division. More than 2,500 jobs were lost with the closure of 48 underperforming Tesco stores, while in April 3,000 jobs were put at risk when the chain cut night shifts for shelf stackers in some of its biggest supermarkets.

Tesco is not alone. Sainsbury’s, Morrisons and Waitrose have also closed stores while Asda has cut jobs as all the big grocers try to keep costs down.

But the latest changes are part of a cost-cutting drive designed to improve the efficiency of Tesco before its £3.7bn takeover of Booker, the cash and carry company behind the Londis and Budgens convenience store chains.

The announcement of the job cuts comes during a difficult week for the UK’s biggest supermarket. On Tuesday, call centres were inundated with customer complaints following an IT glitch that hit up to 10% of online grocery orders.

On Wednesday, Tesco Bank customers were unable to access online banking for several hours after another IT issue. Customer queries for the bank are handled by a separate operation from those in Cardiff and Dundee.

Tesco Bank apologised to those affected and said: “Service is now restored and customers can access their account as normal.”