Tesco is to cut 1,200 jobs at its head office, only a week after announcing that 1,100 jobs would be axed at a call centre, as its chief executive, Dave Lewis, presses on with a cost-cutting drive.
The UK’s largest supermarket chain told staff of the cuts on Wednesday morning. A quarter of staff at offices in Welwyn Garden City and Hatfield face the axe, along with some jobs at the Birmingham head office of Tesco’s One Stop chain and the retailer’s technology and retail support centre in Bangalore, India.
“This is a significant next step to continue the turnaround of the business. This new service model will simplify the way we organise ourselves, reduce duplication and cost but also, very importantly, allow us to invest in serving shoppers better,” a spokesperson for the company said.
“We have made good progress so far in our turnaround but we have more to do. We will work with colleagues to support them as we go through this important transition.”
Head office jobs are to go across many functions including property, finance, buying and marketing once consultation has been completed over the summer.
Steve Dresser, a retail analyst at Grocery Insight, said: “This is drastic but that’s what Dave does. He has clearly been planning this for some time and Tesco is still saying its cost base is too high. The market has changed beyond belief and Tesconeeds to adapt. You can simplify operations a lot at head office but you can get things wrong.”
The job cuts announced on Wednesday are the latest in a string of cutbacks implemented by Lewis, who joined in autumn 2014 and has earned the nickname Drastic Dave for his preference for cutting costs and jobs at both Tesco and his previous company Unilever.
In his first year in charge, Lewis axed nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division. More than 2,500 more jobs were lost with the closure of 48 underperforming Tesco stores in 2015, while in April this year 3,000 jobs were put at risk when the chain cut night shifts for shelf stackers in some of its biggest supermarkets.
Only last week Tesco said it would close a call centre in Cardiff in February, putting 1,100 jobs at risk as part of a turnaround plan in which Lewis has pledged to save £1.5bn of costs.
About 250 jobs will be created in the group’s other call centre, in Dundee, which will handle all customer queries, including emails, social media inquiries and phone calls. Workers from Cardiff will be offered work there but few are expected to move.
Last week Tesco also announced a 10.5% rise in the hourly wage of store staff over the next two years, from £7.62 to £8.42 an hour by November 2018. It will continue to offer premium pay for Sunday and bank holiday shifts, but the premium will slip from time and a half to time and a quarter in July 2018.
Pauline Foulkes, national officer at the shopworkers’ union Usdaw, said: “Tesco’s head office staff are understandably very concerned that the company is proposing further large-scale job losses.
“Usdaw reps and officials are providing support to our members at this difficult time. We will now enter into consultation talks with the company over the coming weeks to look at the business case for their proposed restructuring.
“Our priorities are to keep as many staff as possible in employment and to get the best possible deal for our members. In the meantime, we are continuing to provide the help and advice Usdaw members need through this process.”
Tesco is not alone in trying to cut costs. Sainsbury’s, Morrisons and Waitrose have also closed stores in recent years while Asda has cut jobs as all the big grocers try to keep costs down.
They are battling to fight back against the rise of the discounters Aldi and Lidl, who have forced price cuts across the grocery market. A shift towards buying online and picking up groceries at small local stores has also decreased the number of shoppers visiting big supermarkets.