Tesco cost cuts 15.000 jobs
Britain’s biggest retailer may cut 15.000 jobs in its UK stores and head office with its latest move to simplify operations and achieve targeted cost savings.
The chain, which a few years ago was admired for its growth and its great shops, is now struggling with low growth and weak profitability.
The answer is primarily cost cutting throughout the organization. So far this year, cost-cutting has positively affected the shares in Tesco.
Since the New Year, the shares have risen by almost 17 percent. However, the share value has halved from the top in October 2007.
Tesco, Britain’s biggest private sector employer with a staff of over 440.00 said the main change in its stores would affect its fresh meat, fish and delicatessen counters. It expects to close counters in about 90 stores, with the remaining 700 trading with either what it called “a full or flexible counter.”
Tesco’s move shows an attempt to differentiate its operation from rivals such as No. 4 player Morrisons, which emphasizes its army of trained butchers, fishmongers and other specialists who prepare food in-store, Reuters writes.
Those employed by third party caterers serving hot food to Tesco staff are also losing their jobs as the retailer cuts this service.
All of Britain’s big four food retailers - including No. 2 Sainsbury’s and No. 3 Asda who want to syndicate – are chasing efficiency savings to fund price cuts.
The main threat is German discounters Aldi and Lidl, who are still winning market share.
Tesco’s new discount concept, Jack’s, is so far no threat to the warriors from the continent.
Building a simpler, more sustainable business
“Since we launched our turnaround four years ago, we have built a stronger business focused on serving our customers. Whilst this turnaround continues, it does so in a competitive and challenging market”, says Jason Tarry, CEO UK & ROI.
“In our four years of turnaround we’ve made good progress, but we need to continually adapt to remain competitive and respond to how customers want to shop,” he adds.
Cutting 15,000 staff is equivalent to around 3.4 per cent of the retailer’s current total workforce of 440,000.
Sources: Tesco, Reuters, Retail News, Sainsbury’s