The retailer, founded in 1873 but now part of Home Retail Group after being bought by Sainsbury's in 2016, is also scrapping its iconic catalogues.
A statement from Sainsbury's said: “As we continue to bring our Sainsbury’s, Argos and Habitat teams closer together, we are reviewing our operations at Acton Gate, subject to consultation.
“We understand this will be an unsettling time for those involved and we are supporting them in any way we can. This includes exploring how our contact centre colleagues can continue with their roles from home or an alternative base in future.”
The distribution operation at Acton Gate, which is for Habitat, is outsourced to DHL. The Argos distribution was previously moved to other sites.
Acton Gate, which is leased, is being put on the market with Argos intending to leave the site between January and March next year. It was opened in 1997 after Argos relocated from nearby Penkridge and initially employed 650.
Sainsbury's said that it had been reviewing the operation there before the coronavirus crisis.
Consultation over the plans will start towards the end of September.
Most contact centre staff at Acton Gate have been working from home during the lockdown and will have the option to continue to do so.
The number of redundancies as a result of exiting Acton Gate is not expected to be numerous.
DHL Supply Chain said: “Following a review of its future network requirements, Sainsbury’s Argos proposes to integrate its Habitat logistics operation, which DHL currently manages, into its existing Argos network with effect from January 2021.
"Affected staff have been informed of the situation and will shortly enter into consultation with the company.
"We thank staff for their ongoing commitment at this difficult time and stress that the decision has been based entirely on commercial factors and in no way reflects on the service levels provided at Acton Gate in recent years.”
The bi-annual catalogue has been going for 47 years and more than a billion copies have been produced over the years.
Argos, which employs around 30,000 and has more than 850 standalone stores and shops inside Sainsbury's supermarkets, is now a multi channel retailer and its website is the third largest retail website in the UK with more than a billion visits each year and customers shopping on smartphones and tablets now account for more than 70 per cent of all Argos online sales.
Argos is continuing to invest in in-store technology and all stores in the UK will have easy-to-use digital screens by January, which customers can use to browse the website before placing their order.
The business, which offers more than 60,000 products, will still be producing its Christmas gift guide.
Mark Given, chief marketing officer at Sainsbury’s, said: “Over the decades the Argos catalogue has charted the nation’s changing tastes and trends in everything from must-have toys to the latest gadgets and devices. Today, popular products include wireless earphones, gaming consoles and lots and lots of LEGO. In 1973, when the catalogue launched it was point-and-shoot cameras and spacehoppers.
“Just as our customers’ tastes have changed over the years, so have their shopping habits. We’re seeing an increasing shift towards digital shopping, using our mobile app, website and in-store browsers. Closing the book on the catalogue will help us focus on delivering exciting and inspiring digital shopping experiences to meet the changing needs of our customers, both in-store and online.”