Job Cuts Increasingly A ’Necessary Evil’ As Retailers Cut Back: Analysis

By Steve Wynne-Jones
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Job Cuts Increasingly A ’Necessary Evil’ As Retailers Cut Back: Analysis

When Alexandre Bompard stepped off the stage on Tuesday morning, having delivered his first important speech as Carrefour chief executive, he will have been rightly happy with his morning’s work.

After all, in the eyes of financial analysts, Carrefour’s much-anticipated ‘Carrefour 2022’ transformation plan seems to have got a thumbs up - Barclays European Food Retail Equity Research called it a ‘sensible plan’ with a number of ‘attractive strategic initiatives’ in the pipeline.

In much of the mainstream press, however, the headline was altogether different; with the focus firmly on the 2,400 job cuts the retailer is seeking to make as part of its head office consolidation.

As Bompard indicated during his speech, this figure could yet rise further; if Carrefour cannot find a buyer for the 273 former DIA stores it is looking to offload, these could be forced to close too, resulting in a potential 2,100 more employees out of work.

As one wag pointed out on social media, Carrefour’s announcement came just 24 hours after Emmanuel Macron - another youthful leader - announced the creation of around 700 jobs in France, following a significant investment by Toyota.


What one hand giveth, the other taketh away, it seems.

Across The Channel

Bompard’s announcement also came one day after Tesco, the biggest retailer in the land of the ‘rosbifs’ across the English Channel, said it was cutting 1,700 jobs in a bid to ‘simplify [its] operational structure’.

The roles of people manager, compliance manager and customer experience manager will be discontinued, the retailer said, affecting managers in large stores and distribution centres, however 900 new roles ‘with broader remits’ will be created in their stead.

"We recognise these are difficult changes to make but they are necessary to ensure our business remains competitive and set up for the future,” said Matt Davies, chief executive of Tesco UK and ROI, a line that could easily have been lifted from Bompard’s speech the following morning.


To compound things, and to make it a generally disappointing week for shop floor workers in general, Sainsbury’s too joined the party, with the announcement that it was changing the way its stores are managed, including the scrapping of a number of management posts.

Sainsbury’s has not indicated how many jobs could be at risk following the move, which is being made to “deliver cost savings to be invested in our customer offer,” according to Simon Roberts, the company’s retail and operations director. However some have speculated that this number could be in the thousands.

Unions have unsurprisingly welcomed the move with both disappointment and resignment, with Usdaw, the Union of Shop, Distributive and Allied Workers, issuing practically the same statement, two days in a row, with only the name of the retailer changed.

“We are providing Usdaw members with the support, advice and representation they require through this process,” Pauline Foulkes – Usdaw National officer said in both statements. “Our priorities are to minimise redundancies and help our members stay employed in a suitable role within the business if they choose to do so.”


Necessary Evil

While nobody likes job cuts, recent form has dictated that of all the cost-cutting measures a retailer can implement, they can have the most impact.

Tesco said last October that it had cut operating costs by close to £500 million on an annual basis, and is targeting £1.5 billion worth of cuts. Sainsbury’s is targeting £185 million worth of cuts this year, and a further £500 million in reductions over the next three years.

While savings can be made along the supply chain, inevitably much of this cost cutting has to come from personnel, particularly given the changing nature of the retail sector.

“What we have here though is further demonstrable evidence of the once overweight UK supermarkets right sizing their bloated corporate structures to the needs and wants of the market,” analyst Clive Black said following Sainsbury’s announcement.


In the UK, rising inflation and the growing influence of the discounters has meant that cost-cutting is now a necessity for major grocers - after all, if they were to increase their prices, customers would shop elsewhere. It’s all about remaining competitive, and, of course, retaining margin.

In France, underlining Bompard’s Carrefour 2022 strategy is a doubling down on the business’ online networks - Carrefour understands that it is highly leveraged in an unproductive format (hypermarkets), yet is seeking to ‘move the goalposts’ and potentially use said space to fuel a powerful new digital engine (dark stores).

In both cases, the business case can be said to be valid.

And as the tectonic plates under the retail industry continue to shift, and the likes of Amazon gain traction among shoppers, this trio of redundancy announcements won’t be the last.

© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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