Tesco announced yesterday that it is cutting around 4,500 jobs from its Metro stores as part of changes to ensure the format better meets the needs of the modern grocery shopper and can survive an “increasingly competitive and challenging retail environment”.
The retailer plans to “simplify and reduce processes and administrative tasks” across all of its 153 Metro outlets. The changes are said to reflect the fact that nearly 70% of customers are now using the format more like a convenience store, rather than for larger, weekly shops it was originally designed for.
Tesco revealed that changes to the stores would include “faster and simpler” ways of filling shelves, with fewer products stored in the back rooms and more stock going straight to the shop floor; Staff working “more flexibly” across the store to improve customer service at the busiest times of the day and in the right areas of the store; and a “leaner” management structure.
The group also said it was making some changes in 134 of its 1,750 Express stores, where customer footfall is lower. These include a reduction in opening hours during quieter trading periods and simplifying stock routines.
The changes in both formats is expected to lead to overall reduction of around 4,500 staff. Tesco said that it hoped to find alternative roles within its business for as many as possible.
A spokesperson for the retailer stressed that there were no immediate plans for store closures in either format, and that the Metro concept would be retained.
Jason Tarry, Tesco’s UK & Ireland CEO, commented: “In a challenging, evolving retail environment, with increasing cost pressures, we have to continue to review the way we run our stores to ensure we reflect the way our customers are shopping and do so in the most efficient way.
“We do not take any decision which impacts colleagues lightly, but have to make sure we remain relevant for customers and operate a sustainable business now and in the future.”
Tesco has already cut thousands of jobs in recent years as part of Chief Executive Dave Lewis’s turnaround plan. This includes shaving £1.5bn off the group’s operating costs by 2020 in a bid to improve margins and release funds to combat the discounters.
In January, the group announced that 9,000 jobs were at risk in its stores and head office as part of moves to simplify its business and adapt to changing shopping patterns. The changes included closing some of its deli counters, simplifying its merchandising, and introducing a “leaner structure” for its head office teams.
Speaking to the Financial Times, Bruno Monteyne, retail analyst at Bernstein, said that Metro was a legacy format whose small store estate meant it had rarely been a priority for Tesco. He added: “They have fixed the bigger bits so now they are moving on to the smaller ones. The changes they are making are similar to the ones they made at the supermarkets.”
NAM Implications:
- A change to reflect latest patterns in shopper behaviour…
- …and any miscalculation by Tesco will be reflected in footfall, the ultimate retail driver.
- The Metro stores obviously fulfil a consumer need, and cutting to size is part of the process.
- NAMs need to focus on proposing initiatives that optimise the process…
