Tesco and Sainsbury’s, the UK’s biggest grocers, are cutting thousands of jobs as intense competition and wage increases heap more pressure on Britain’s beleaguered retailers.
Sainsbury’s is cutting management positions across its convenience stores and supermarkets, the London-based retailer said in a recent statement.
That followed an announcement Monday from larger rival Tesco, which is scrapping 1,700 management jobs at large stores and distribution centres. The UK’s biggest grocer said that it is creating 900 roles with broader responsibilities.
“[Sainsbury’s restructuring will] deliver cost savings to be invested in our customer offer,” said Simon Roberts, the company’s retail and operations director, in the statement. The employees affected can reapply for one of fewer newly created management roles, with unsuccessful applicants demoted or laid off.
Sainsbury’s declined to specify how many job losses it expects, but the reductions will affect positions across its network of more than 1,400 stores.
Cost Pressures
The two grocers are taking similar steps to deal with cost pressure stemming from a rise in the minimum wage and the pound’s decline following the Brexit vote.
Britons are shopping more on Amazon and other online retailers, while discounters Aldi and Lidl are gaining market share and preventing the likes of Tesco and Sainsbury’s from raising prices more aggressively.
“The job cuts are necessary for the grocers to rebuild their profits while narrowing the price gap between themselves and the discounters,” Shore Capital analyst Clive Black said by email.
In last year’s annual report, Tesco said that it employed 464,520 workers – down by more than 40,000 since chief executive officer Dave Lewis took the helm in 2014.
Tesco said in October that it had cut operating costs by £485 million on an annual basis, aiming to reduce them by a total of £1.5 billion by 2020. Sainsbury’s expects to cut costs by £185 million in its current financial year, and it is seeking a further £500 million in reductions over the next three years.
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