Read the article. It's the UK (which still has most EU employment law active). Now, I don't think it's illegal to do what they're doing. Effectively, I can bet I know exactly how they're framing this, and it'll be totally legal.

The calls were almost certainly initiating the redundancy process. That is, technically EVERYONE (probably below management) is being made redundant. As part of the redundancy process, an employer is expected to attempt to find internal opportunities for the employees to be culled, and this new position is what they are likely offering as said opportunity. I suspect this is working around a bit of a grey area in redundancy law. But, I don't think they're falling foul of any law. But, I'm not a legal expert.

So, at the end of the required redundancy period (it varies based on employment duration) they will either be let go (with whatever statutory redundancy pay they're owed) or re-employed under the new zero hours contract.

Personally, I think this has the potential to blow up in their face a bit. It's not allowed in the UK to employ someone on a zero-hour contract and not allow them to work elsewhere. Such a clause in a contract may be ignored. Now, this could well mean they say "Oh we need you on Wednesday" and you say "Well, actually I've already agreed a shift elsewhere on Wednesday" and there's really not much they can do about it. I also hope the people working there just move on.

The worst thing that can happen is that the parent company benefits from this. It'll just make other retail companies do the same in a race to the bottom.