Barely Managing: Britain’s Sainsbury’s to cut hundreds of management jobs
February 19, 2020
2 min read
What's going on here?
Sainsbury’s is set to cut hundreds of management jobs in a bid to cut costs and streamline the business.
What does this mean?
The aim, according to Chief Executive Mike Couple, is to bring the supermarket operation and its Argos arm closer together. Sainsburys purchased Argos in 2016 and has been integrating the two businesses since. Furthermore, whilst the focus is on cost cutting and the further integration of Argos, the aim is also to avoid duplication of roles. Couple argued that this merely represented the “finalising” of new management structures and the merging of its store support centre teams. The areas in which jobs are to be cut are commercial, retail, finance, digital and human resources. This follows the reduction of the senior leadership team by over 20% at the start of the 2019-20 financial year in March. It is also not the only supermarket chain to cut roles like this, with Morrisons making a similar move earlier this year (for more information, see our article on that here).
What's the big picture effect?
The impact of the failed merger between Sainsbury’s and Asda is undoubtedly at the core of Sainsbury’s troubles, as it cost Sainsbury’s £46m as well as restructuring costs of £81m and defined benefit pension expense of £118m.
The reduction in jobs is part of Sainsbury’s new strategy which was announced in September 2019 and is part of a plan to save £500m in costs by 2024. However, retail analyst Richard Hyman has argued that this could have an adverse impact on how Sainsbury’s operates as “stripping out people without any impact on the business [and the customer experience] is difficult”. Hyman goes on to discuss how retail is a difficult market which is forcing some chains to prioritise lowering costs over investing.
Nevertheless, Coupe argues that “truly integrating our business also unlocks efficiencies that we can reinvest in the things that matter most to our customers”. There is a trend within the big four supermarket chains towards axing jobs in order to be able to compete against discounters such as Aldi and Lidl in the price battle, which is further exacerbated by changing customer habits.
Sainsbury’s themselves have seen weak sales of games and toys over the Christmas period and sales of general merchandise at the group slid nearly 4% in the 15 weeks to 4 January. This indicates that the group has fallen victim to the changing trends of consumers who are increasingly choosing not to spend their extra money. Furthermore, it might not be enough to save costs through the reduction of jobs if this trend continues.
Report written by Natasha Dawes
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