Tesco has said that it’s cutting about 1,200 head-office jobs, as the UK grocery leader adjusts to increasing cost pressures.
About a quarter of workers will lose their positions at its British base, in Welwyn Garden City, England, and at offices in Bengaluru, India, the supermarket operator said Wednesday.
Cost Pressures
The move is a response to multiple cost pressures, including increases in minimum-wage levels and higher sourcing costs resulting from sterling’s depreciation since last year’s Brexit vote. Chief executive officer Dave Lewis has already cut tens of thousands of jobs since taking the helm in 2014, ranging from call-centre workers to store managers.
Tesco said in a statement that the head-office cuts are “a significant next step to continue the turnaround of the business”. The shares rose as much as 2%.
After overcoming a 2014 accounting scandal, Lewis is seeking to regain the upper hand in a market where the incursion of budget chains Aldi and Lidl and the rise of online shopping have wreaked havoc among Britain’s grocers.
“All the large UK supermarket operators have learned that they cannot allow a big price differential to open up against the discounters,” Clive Black, an analyst at Shore Capital, said by phone. “To achieve that and protect profit, Tesco needs to pay ruthless attention to its operating costs.”
Read More: Tesco ‘Won’t Be The Last’ Retailer To Cut Jobs: Euromonitor
‘More to Do’
Adjusting for such a climate, last week Tesco announced the closure of a call centre in Cardiff, Wales – expected to cost 1,100 workers their jobs. Minimum-wage increases and technological changes may result in as many as 900,000 job losses in the industry over the next decade, according to industry group the British Retail Consortium.
Tesco said that the latest cuts “will simplify the way we organise ourselves”, while reducing duplication and cost.
“We have made good progress so far in our turnaround, but we have more to do,” it said.
The grocer reduced its global workforce by 2% to 464,000 in its last financial year. More than two thirds of its staff are based in the UK.
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
