The plans were intended to “reshape and redefine” the organisation. It was also intended to cut the number of roles permanently based in central London by about 400, across IT and logistics, as part of the retailer’s strategy to work “more simply and more efficiently”.
Reducing the workforce would be achieved through a combination of fewer contractors, natural attrition and redundancies for M&S employees, said the retailer. But the cuts were said to leave M&S store employees unaffected.
If the cuts go ahead, M&S predicted annual operating cost savings would total about 1% of the UK cost base. But the firm’s cost growth guidance for the current year remains unchanged at about 3.5%.
Cost of about £15M
The changes would mean a non-underlying cost of about £15M, which included the changes to the senior management team that have already taken place.
New M&S ceo Steve Rowe said: “M&S has to become a simpler and more effective organisation, if we are to deliver our plans to recover and grow our business.
“It is never easy to propose changes that impact on our people, but I believe that the proposals outlined today are absolutely necessary and will help us build a different type of M&S – one that can take bolder, pacier decisions, be more profitable and ultimately better serve our customers.”
Rowe said the retailer remained committed to investing in store staffing and improving shoppers’ customer experience, which was why store staff had not been included in the cuts.
M&S said that its review of operation revealed the business had become “too complex and inefficient”.
Strip out unnecessary costs
The cost-cutting proposals would remedy those problems by removing duplication, driving accountability and establishing clear, consistent processes, which would strip out unnecessary costs.
M&S employs more than 3,500 people working across its seven UK head offices. The retailer employs over 71,000 people in its UK stores and supporting customer service functions. Those roles were unaffected by the proposed changes.
In July, the retailer reported that its first-quarter food sales fell by 0.9% on a like-for-like basis.
Meanwhile, the proposed cuts followed Asda’s announcement in January that it planned to cut hundreds of head office jobs.
In April 2015, Morrisons revealed its decision to axe 700 head office roles.
M&S’s problems and planned solutions
The problem: “M&S has become too complex and inefficient.”
- Removing duplication
- Drive accountability
- Establishing clear, consistent processes
- Strip out unnecessary costs