Skip to main contentSkip to navigationSkip to navigation
A Sainsbury's worker replenishes the bread aisle
Sainsbury’s job cuts: all the big supermarket chains have announced plans to reduce costs as they try to compete with Aldi and Lidl. Photograph: Bloomberg via Getty
Sainsbury’s job cuts: all the big supermarket chains have announced plans to reduce costs as they try to compete with Aldi and Lidl. Photograph: Bloomberg via Getty

Sainsbury's to cut 2,000 jobs across UK

This article is more than 6 years old

Store and back office roles axed to save £500m to counter impact of price war with discounters Aldi and Lidl

Sainsbury’s is axing 2,000 store and back office roles as the supermarket chain looks to slash costs by £500m amid an intensifying price war with Aldi and Lidl.

The retailer is restructuring its HR departments, getting rid of 1,400 store-based clerks and another 600 staff based in the back offices that serve the chain as well as Argos and Sainsbury’s bank.

“The UK grocery market is changing at a rapid pace and it’s crucial that we transform the way we operate to meet future challenges and continue to provide customers with best in class service,” said a Sainsbury’s spokesman.

All the big supermarket chains have announced recent job cuts as they seek to compete with the fast-growing German discounters Aldi and Lidl.

Tesco is shedding 2,300 staff as part of a cost-cutting programme that is hitting head office workers as well as staff based at its Cardiff call centre which will close next year.

Thousands of Asda workers are also facing redundancy or a dramatic cut in their working hours as Britain’s third-largest supermarket chain looks to cut costs.

Sainsbury’s, which employs about 119,000 full-time staff, is moving towards a centralised HR model as it overhauls to save hundreds of millions of pounds.

The company will reach the end of a three-year plan to save £500m in March 2018 but Mike Coupe, the chief executive, has said it will then embark on a new programme designed to save the same amount again.

Sainsbury’s has been working with McKinsey, the management consultancy, on the headcount reduction plan. The changes to HR mean tasks like processing payroll will no longer be done in store. The 600 head office staff affected by the other change, first reported by the Times, are based in Manchester, Coventry, Edinburgh and London.

“Following a comprehensive review, we are proposing some updates to our HR structures and systems, as well as changes to a number of other support roles,” added Sainsbury’s.

“This has been a difficult decision and we appreciate that this will be a tough time for those colleagues affected by the changes.”

In March, Sainsbury’s said it was cutting 400 jobs in store while another 4,000 workers would face changes to their working hours as it looked to run its supermarkets more cheaply. The changes included scrapping the night shift in 140 supermarkets.

Under the leadership of Coupe, Sainsbury’s has sought to broaden its appeal with the £1.4bn purchase of Argos. The deal reduced Sainsbury’s reliance on the highly competitive grocery market and also gave it access to Argos’s fast delivery network.

The big four supermarkets –Tesco, Sainsbury’s, Asda and Morrisons – are losing market share to Aldi and Lidl, which added £390m to their sales over the past three months, according to Kantar Worldpanel. That figure was half of thegrocery market’s overall growth in the 12 weeks ending 8 October.

Kantar Worldpanel data showed Aldi and Lidl with a combined market share of 12%. However, Moody’s, the debt rating agency, predicts this proportion could rise to 15% over the next three years – a level that would force rival bosses to rethink their business models again.

“We believe most of the ongoing revenue gains by the discounters will come at the expense of the ‘big four’,” said David Beadle at Moody’s.

“The only uncertainties are the extent to which inflation and population growth soften the blow of this hit to revenue, and how the loss of market share will be spread out.”

The price war with the discounters comes at a time when retailers are struggling to pass on rising costs to hard up shoppers. On Tuesday, official data showed inflation had edged up to 3% – its highest level since 2012.

“Retailers have done a great job of cushioning shoppers from the rising food chain costs they’re experiencing, exacerbated by the weakening pound, but this can’t last for ever,” said Nielsen analyst Mike Watkins.

Comments (…)

Sign in or create your Guardian account to join the discussion

Most viewed

Most viewed