Discounter success forces Tesco and Morrisons to act

Morrisons cuts 2,600 jobs

CEO Dalton Philips wants to radically “modernise the way stores are managed with the aim of reducing in-store management tiers, simplifying responsibilities and improving customer service”.

According to Morrisons, sometimes as many as 7 managerial layers are between the store manager and the shop floor in some of the larger stores. “These changes will improve our focus on customers and lead to simpler, smarter ways of working.”

British specialist paper The Grocer believes the company will cut 2,600 jobs, even though it hopes to “recycle” as many people as possible in new convenience stores and several larger stores which will open this year.

Tesco will move to regional divisions

Having announced its worst turnover evolution in the past 40 years (quarterly turnover drop of 3.7 %), Tesco will now rearrange its store structure. Each group used to have its own board, but the group now aims to move to a geographical structure based on each format.  Great Britain will consist of three regions (North, Central, South) and a new business unit will take care of the Extra and Superstore supermarkets. A separate business unit will look after the smaller convenience stores (Express and Metro). The restructuring plan would not result in jobs cut.

The British price war has pushed an increasing number of price-conscious Tesco and Morrisons shoppers to Aldi and other discounters, something that is also causing a major ruckus elsewhere in the European retail landscape.