Tesco is set to make a number of redundancies across its UK-based non-food departments in the coming months as Britain’s number one grocer looks to realign its domestic operations following slow sales.
Retail Gazette understands that around 34 general merchandising (GM) and clothing jobs will be cut as the supermarket reigns in its employment activity in what represents the first significant recruitment policy change since Richard Brasher was named UK CEO earlier this year.
Having recruited fairly rapidly over the last two years to support ambitious GM expansion plans, it now appears that Tesco is changing direction as this growth has just not materialised.
It may be that the grocer, which recently moved its central European buying and merchandising function to the UK, finds it can now employ people to share UK and European roles.
Half-year results for the 26 weeks to August 27th 2011, published earlier this month, showed that UK like-for-like (LFL) sales excluding petrol and VAT fell by 0.5 per cent compared to the same period in 2010.
At the time, Tesco attributed the sluggish sales to a “subdued market demand in non-food categories, especially electronics and entertainment”, which are two of the business’s largest product groups.
LFL trading across the whole of GM, clothing & electricals was down 4.8 per cent during H1, compared with a 3.3 per cent decline in the second half of 2010/11.
The supermarket said that strengthening the performance of these categories in the UK was “a priority” and it indicated that “substantial changes to product ranges, category emphasis and space allocation in stores” is scheduled for the second half of the financial year.
It would appear that this focus on GM improvement involves a freeze on recruitment in hard-line ranges, although it is believed that fashion head office roles in the UK are still being filled.
Neil Saunders, Managing Director of market analysts Conlumino, told Retail Gazette that Tesco’s GM offer is “simply not up to scratch” in many of its stores, and although competitively priced, it needs to inspire customers more.
“The products themselves are reasonable, but the execution is poor: the proposition looks messy, lacks focus and is far from exciting,” he explained.
“Newer stores do showcase Tesco’s capabilities in the GM arena. However, the GM strategy needs to be more coherent across all stores and channels.
“Tesco has a massive opportunity within this part of the market but at the moment they are falling short of their potential.”
In a statement released this morning, Tesco confirmed that redundancies are being made but, where possible, the retailer is looking to find alternative roles within the group for staff affected by the changes.
“In these difficult economic times we have reviewed a number of office roles to ensure that we are working as efficiently as possible on the things that we know will make a difference for our customers,” said Tesco.
“Following this review there will be a small number of redundancies, subject to consultation. We recognise the impact of this and where possible we will work with those affected to find an alternative role within the business.”