Sainsbury’s is axeing 2,000 jobs amid price war with Aldi and Lidl

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A journalist trials a SmartShop mobile app, which is still in development, at a Sainsbury's store in northwest London, Britain October 23, 2015
A journalist trials a SmartShop mobile app, which is still in development, at a Sainsbury's store in northwest London, Britain October 23, 2015 Reuters/Suzanne Plunkett

Sainsbury's is cutting up to 2,000 jobs across the UK as the grocery supermarket looks to slash costs amid the price war with fast-growing German discounters Aldi and Lidl. The company is axeing 1,400 store-based clerks and 600 staff based in the back offices.

A Sainsbury's spokesperson has explained the decision, saying transforming the way the retailer operates is important. “The UK grocery market is changing at a rapid pace and it’s crucial that we transform the way we operate to meet future challenges and continue to provide customers with best in class service,” the spokesperson said, according to The Guardian.

Sainsbury’s is restructuring its HR department and is moving towards a centralised HR model. The reform means some tasks such as processing payroll will no longer be conducted in store.

“Following a comprehensive review, we are proposing some updates to our HR structures and systems, as well as changes to a number of other support roles,” Sainsbury’s explained. It added that it has been a tough decision and the company recognised  it will be a tough time for those affected by the changes.

It has been working with management consultancy McKinsey on the headcount reduction plan. The company, which employs about 119,000 full-time staff, hopes to save hundreds of millions of pounds.

Earlier this year, Sainsbury’s declared it was cutting 400 jobs in store, and another 4,000 workers would face changes to their working hours. Scrapping the night shift in 140 supermarkets was part of these changes.

Sainsbury’s, Tesco, Asda and Morrisons vs Aldi and Lidl

Other huge supermarket chains have recently announced job cuts as they seek to compete with Aldi and Lidl. Tesco, for instance, is cutting 2,300 staff as part of a cost-cutting move.

Asda workers are also dealing a dramatic cut in their working hours. Britain’s third-largest supermarket chain looks to cut costs.

Sainsbury’s, Tesco, Asda and Morrisons, the big four supermarkets, are losing market share to Aldi and Lidl. Based on Kantar Worldpanel data, Aldi and Lidl have a combined market share of 12 percent. Debt rating agency Moody’s predicts this proportion could rise to 15 percent over the next three years.

The price war with Aldi and Lidl comes at a time when retailers are struggling to pass on rising costs to hard up shoppers. Official data on Tuesday showed inflation had edged up to 3 percent, which has been its highest level since 2012.

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