Tesco ‘1,200 job cuts’: suppliers face price rise battle

By Matt Atherton contact

- Last updated on GMT

Tesco will reportedly cut 1,200 jobs (Flickr/Gordon Joly)
Tesco will reportedly cut 1,200 jobs (Flickr/Gordon Joly)
Tesco’s suppliers face resistance to price increases and higher demand for new product development at no further cost, after the supermarket revealed it was cutting a reported 1,200 head office jobs.

The UK’s largest retailer was still under pressure to turn its fortunes around, and the job cuts were just part of its overall plan, an industry expert told FoodManufacture.co.uk. The comments came after Tesco confirmed it informed workers today (June 28) of plans to reduce the size of the workforce.

The industry expert said: “I am sure that Tesco remains under considerable pressure, despite the progress made under Dave Lewis. No doubt Tesco are looking at all ways of improving their performance, operationally and financially. Job cuts will be just part of an ‘efficiency improvement’ process.

‘Impact on suppliers’

“The impact on suppliers will be the same as always – range rationalisation; resistance to, and delay in, necessary price increases; demands for more new product development/product reformulation at no increased cost etc. There is also the Brexit foreign workforce issue, which is a massive issue for food and agriculture in this country, which the government is sweeping under the carpet.”

Tesco will axe 1,200 jobs at its head office in Hertfordshire, the Press Association today revealed. A Tesco spokesman confirmed there would be job losses, but didn’t comment on numbers.

“Today we have shared with colleagues across Tesco changes that we plan to make to the way we operate our business,”​ the Tesco spokesman said. “This is a significant next step to continue the turnaround of the business.

‘Important transition’

“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. 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.”

The job losses follow Tesco’s highest sales growth since 2012, according to latest Kantar Worldpanel data, released on June 27. The supermarket – which has the UK’s largest grocery share – attracted a further 369,000 shoppers over the three months to June 18. But, the industry expert warned that its market share was falling.

“Bearing in mind its UK grocery market share was over 30% at the end of 2011, it is now down to 27.8% in the latest Kantar Worldpanel numbers. That is a massive drop,”​ the expert said.

Meanwhile, in March, Tesco axed 1,700 deputy manager roles​. An analyst warned there could be a second wave of job losses this year.

Tesco job cuts impact on suppliers – at a glance

  • Range rationalisation
  • Resistance to price increases
  • Demand for new product development at no increased cost

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