Sainsbury’s Cutting Thousands Of Jobs In ‘Challenging’ Cost Environment

Sainsbury’s is set to cut thousands of jobs through the closure of its hot food counters and cafes, and by reducing senior management roles, amid concerns about higher labour costs from impending tax rises.

Sainsbury’s stated that the move was part of its three-year ‘Next Level’ strategy, which aims to bring more of its core food ranges to customers, while simplifying central divisions and management structures.

To create more space for its fresh food ranges, the company wants to close its remaining patisserie, hot food and pizza counters. In a further move to simplify the business, Sainsbury’s also plans to close its remaining 61 in-store cafés, subject to consultation.

They are also making changes to its central management structures to support “faster decision making and drive performance” in Sainsbury's and Argos.

Moves include: Rhian Bartlett to CCO Sainsbury’s, Graham Biggart to MD Argos & Chief Strategy and Supply Officer. Patrick Dunne, to Operating Board as Chief Property and Procurement Officer & MD SmartCharge.

In seeking £1bn of operating cost savings, all head office depts to become dedicated to the different needs of its Sainsbury’s and Argos businesses, while creating “fewer, bigger roles with clearer accountabilities”.

Sainsbury’s wants to drive faster decision-making and cost reduction via an estimated 20% reduction in senior management roles over 3 months. Overall, a proposed 3,000 reduction in roles across the business via discussions with staff affected and exploring redeployment opportunities where possible.

Chief Executive Simon Roberts said: “As we accelerate into year two and beyond of our strategy, we are facing into a particularly challenging cost environment, which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.

“The decisions we are announcing today are essential to ensure we continue to drive forward our momentum but have also meant some difficult choices impacting our dedicated colleagues in a number of parts of our business. We’ll be doing everything we can to support anyone impacted by today’s announcements.”

Clive Black, head of consumer research at Shore Capital, said Sainsbury’s had unveiled “further, increasingly necessary steps post the autumn Budget, to manage its cost base to enable ongoing investment”.

NamNews Implications

• Either cut job numbers or raise shelf prices...
• Looks like Sainsbury’s wants to try the ‘job-cut’ route before raising prices.
• In their attempt to deliver £1bn of operating cost savings.
• Anticipate similar moves from rivals as the Autumn Budget Tax increases impact the bottom line...

Owner Of Poundland Hires Advisers To Help Address Sales Slump

Pepco Group is reported to have drafted in City advisers to explore radical options for arresting the growing crisis at its Poundland chain.

According to Sky News, consultants from AlixPartners have been hired to address the sales slump at the discount retailer, raising questions over its future ownership.

City sources quoted in the report suggested possible formal restructuring process, prompting significant store closures or sale of the business.

AlixPartners is understood to have been formally engaged last week, with options including a company voluntary arrangement (CVA) or restructuring plan being floated by advisers on a highly preliminary basis.

Sources close to the group told Sky News no decisions had been taken and immediate focus was improving Poundland’s cash performance and reviving the chain’s customer proposition, stressing that a sale process was not underway.

Last week, Pepco Group revealed that Poundland’s performance had deteriorated further over the Christmas quarter, with like-for-like sales down 7.3% (weak clothing + general merchandise sales and “challenging” market conditions.

Poundland trading statement: they had suffered “a more difficult sales environment and consumer backdrop in the UK, + margin pressure + an increasingly higher operating cost environment”.

“We expect that the toughest comparative quarter for Poundland is now behind us – the same quarter last year represented a period prior to the changes made within our clothing and GM ranges – and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year.

Poundland will also not open any net new stores during the year.

“We are continuing a comprehensive assessment of Poundland to recover trading and get the business back to its core strengths, including undertaking a thorough assessment of all costs across the business, as well as evaluating its overall competitive positioning.”

The appointment of AlixPartners comes several weeks after Stephan Borchert, the Pepco Group Chief Executive, said he would consider “every strategic option” for reviving Poundland’s performance.

He is expected to set out formal plans for the future of Poundland, along with the rest of the group, at a capital markets day on 6th March.

Among the measures the company has already taken to halt the chain’s declining performance has been to increase the range of FMCG and general merchandise products sold at its traditional £1 price point.

NamNews Implications

• Rivals have to be puzzled at how a ‘pound shop’ launched in December 1990…
• …can retail anything at a £1 price-point (having absorbed 3% average annual inflation)…
• ...meaning that a £1 in 1991 should be priced at £2.42 today.
• That said, great for Poundland to have made it work, thus far…
• But perhaps time to acknowledge that the Pound-shop concept has reached its limits…

Aldi Reveals Store Opening Plans For London

Aldi is planning to open nine stores in London this year as part of a £55m investment within the M25.

Four of the locations set for openings in the next 12 months include Wimbledon, Fulham Broadway, Caterha, and Orpington. They form part of the discounter’s £650m investment plan for the UK in 2025, which also includes store upgrades.

Aldi stated that it has a long-term ambition to open another 100 stores in London.

Jonathan Neale, Managing Director of National Real Estate at Aldi UK, commented: “We strongly believe that everyone in Britain should have access to high-quality food at our unbeatable Aldi prices. But we know that there are still thousands of shoppers in the capital that don’t yet have access to an Aldi nearby.

“We don’t think it’s fair that so many people still have to make do with big prices at other supermarkets, which is why London continues to be a real focus for us as we work to bring even more Aldi stores to shoppers across the capital.”

NamNews Implications:

• Aldi are planning for a further 100 stores.
• With little need to exaggerate their intent.
• i.e. Take it as read...
• Then presumably rivals will match the coverage…
• …at least.
• (and suppliers too, hopefully?)

Lidl GB is reaffirming its commitment to “responsible marketing” by removing all packaging designs deemed attractive to children from its least healthy own-brand products by the middle of this year.

Going further than new legislation that is set to restrict the advertising of less healthy to children from October this year, they are eliminating design elements, i.e. animated shapes, brightly coloured patterns, or playful product names that do not reflect the items themselves.

i.e. Lidl’s gummy bears will transition from bright, cartoon-adorned packaging to a simpler, more product-focused design that emphasises its fruit flavours.

In 2020, Lidl became the first supermarket in the UK to confirm the removal of cartoon characters from its breakfast cereals to help parents resist pester power.

Early 2024, they added a ban on cartoon characters from all ‘less healthy’ products aimed at children.

Lidl stated that its strengthened commitment aims to ensure that any product deemed as least healthy according to the WHO Nutrient Profiling Model or FSA Nutrient Profiling Model, alongside any breakfast cereal, cannot be marketed in a way that appeals to children, with only the healthiest of products being targeted at them.

“We know that households want to achieve healthier lifestyles, and so we’re fully committed to helping families adopt better habits while still having access to high-quality, affordable, and enjoyable products,” said Richard Bourns, Chief Commercial Officer at Lidl GB.

“As a father of young children myself, I know how influential packaging designs can be on their preferences, and therefore understand the importance of taking a proactive position to better support parents.

“Introducing these changes ahead of the upcoming legislation on advertising signals our readiness to meet and exceed these standards.

Lidl has long been making changes for the better, so it’s great that we’re continuing our legacy of leading the way in supporting healthier lifestyles by removing unhelpful packaging and enhancing designs for products that contribute to better diets, like our Funsize fruit and veg range.”

Rebecca Tobi, Senior Business and Investor Engagement Manager at the Food Foundation, added: “Despite the critical importance of good nutrition for children, commercial foods high in sugar and salt are often heavily marketed towards children, making it impossibly hard for families to navigate their way through the supermarket aisles without falling victim to pester power.

Ahead of new government regulation coming in later this year, this is a very welcome and market-leading move by Lidl GB to better support families to access healthier diets.”

NamNews Implications:

• Worth keeping in mind that this is a discounter initiative…
• And has to be a pointer for other grocers…
• Leading to some pressure on brands in affected categories, maybe?

Tesco Rolling Out Secure Chillers To Tackle Shrinkage

Tesco is rolling out secure cabinets to a further 50 of its stores to secure high-value items like champagne and sparkling wines.

The in-aisle cabinets, supplied by Wanzl, can only be opened by customers via a keypad, with an alarm sounding if the door has been left open for more than seven seconds or propped open.

A report by trade magazine The Grocer reveals that the cabinets have already been rolled out to 22 stores – including two in smaller Express stores – following a trial which started in late 2023.

The latest version of the cabinets is said to feature an updated customer journey, aimed at reducing friction for the shopper.

Lee Gilks, Wanzl’s UK head of retail shop solutions, is quoted as saying: “High-value alcohol in stores has always been a challenge. You have to strike the balance between selling things and locking things away. To fix shrinkage you could just put a massive lock on it, but that becomes a bit of a sales turn off.”

He noted that Wanzl’s solution has a “really friendly” customer interface and doesn’t stand in the way of someone getting what they want to get, but has significantly reduced theft incidents.

The Grocer’s report highlighted that future potential for the cabinets included digital header screens, weighted shelves and cameras that could record the demographics of shoppers and the products they select.

NamNews Implications:

• The balance between selling things and locking things away.
• The classic shrinkage prevention trade-off…
• Couple that with shopper perception re future use of
• - digital header screens
• - weighted shelves
• - cameras that could record the demographics of shoppers and products selected
• Perhaps a return to the shelf behind the checkout?

Asda’s New Chairman Kicks Off Restructuring After Disappointing Christmas

Six weeks after returning to Asda as Chairman, Allan Leighton has launched his first round of cost-cutting as part of an overhaul of the troubled business.

According to The Telegraph, Leighton revealed to staff last week that 13 regional managers would be leaving the business as part of a shake-up aimed at trimming headcount and improving performance.

The restructuring comes after a disastrous festive period for Asda, with recent Kantar data showing the chain suffered a 5.8% fall in sales during the 12 weeks to 29 December.

In an internal memo released on 7th January, Asda’s management confirmed that the restructuring will mean that supermarkets and express stores will now be managed across 22 “sub-regions”, down from 30.

This will mean fewer regional managers across the business with control over more stores.

“Change is never easy and unfortunately we have had to say goodbye to a number of colleagues,” the memo said.

The move comes just two months after Asda announced that it was scrapping around 475 head office roles as part of attempts to “remove duplication and simplify structures”.

Since replacing Lord Rose at the end of November, Leighton has vowed to “restore Asda’s DNA” by cutting prices and improving product availability. However, he has warned that it could take as long as five years to improve the supermarket’s fortunes, raising questions over the stewardship of majority-owner TDR Capital.

Commenting on the article by The Telegraph, an Asda spokesperson said: “We made changes to our field-based retail team regions to reflect the scale of our business across large stores and convenience.

These changes set us up to serve our customers in the best way for 2025 as we deliver Asda Price and other exciting propositions.”

NamNews Implications:

• The key issue for suppliers (and retail rivals?) has to be the extent to which these manpower cuts will be sufficient in terms of “restoring Asda’s DNA” by cutting prices and improving product availability.
• Given the probable five-year requirement for improvement of Asda’s fortunes…
• …perhaps the closing of a significant number of stores will be necessary…
•  …to allay stakeholders’ fears?

Tesco And Lidl Remain Top Performers As Discounts Drive Growth

Latest data from Kantar shows that take-home sales in the grocery sector rose by 4.3% over the four weeks to 26 January as supermarkets ramped up discount activity to attract cash-strapped shoppers after the costly Christmas period.

This also helped drive down grocery price inflation from 3.7% in December to 3.3% during the opening weeks of 2025 at a time when retailers are warning they may have to increase prices later this year to offset the hikes in employer national insurance contributions and the minimum wage. In January, prices rose fastest in categories such as chocolate confectionery, chilled smoothies & juices and butters & spreads, while they fell fastest in ambient cooking sauces, household paper products and cat food.

Spending on promotions during the four weeks rose by £274m year-on-year, accounting for 27.2% of sales – the highest level in January since 2021. Fraser McKevitt, head of retail and consumer insight at Kantar, noted that people also turned to non-branded products to help keep costs down, with own label as a proportion of sales hitting a record high of 52.3% in January. Spending on supermarket own label lines was up 5.4%, boosted by consumers buying premium products in days leading up to New Year’s Eve.

Meanwhile, the Kantar data confirmed that shoppers started the new year with a focus on wellness and health. More than 10% of the average consumer’s January grocery bill was spent on fresh fruit, vegetables and salad, totalling £1.2bn – £193m more than in December. Nathan Ward, business unit director for usage and out-of-home at Kantar, commented: “Rolling into the new year, health tends to play a bigger role in our grocery choices. Over a quarter of take-home food and drink in January is chosen with health at least partially in mind, as shoppers tell us they want to eat less processed food and feel the benefit of fibre and vitamins.”

Protein products also pulled their weight at the tills as demand for bars, bites, and drinks boosted spending on sports nutrition products. Sales for this category at supermarkets were 47% higher than last year, with over two million households buying these items during the month.

Sales of low and no alcohol drinks were 7% higher than last January, and 6.7% of households bought at least one of these alternatives. McKevitt said: “It’s no surprise to see the low and no alcohol trend make its mark in January, but given some of the generational splits we have seen in grocery, it’s interesting that older shoppers are just as likely to take these products home as younger ones. Not everyone signed up for dry January though, with 49% of people buying an alcoholic drink this month – but this is a pretty big drop from December’s 76%.”

Looking at the performance of individual retailers, sales at Lidl rose 7.4% over the 12 weeks to 26 January, making it three continual years of growth for the discounter, whose market share now stands at 7.2%. Aldi’s growth accelerated for the third consecutive month, with sales up 4.2% and its market share increasing to 10.2%.

Tesco gained the most share, with its 28.5% hold of the market now 0.7% higher than this time last year after seeing its fastest rise in sales since April 2024 at 5.6%. Sainsbury’s also outpaced the market with sales growth of 4.2% and an increase in share from 15.7 to 15.9%.

Despite an upbeat trading statement last week, sales at Morrisons were unchanged, and its market share slipped to 8.6%. Asda continued its dismal run, with its sales sliding 5.2% ahead of last week’s launch of a major Price Rollback campaign aimed at kick-starting its recovery.

Ocado was the fastest-growing grocer for the ninth consecutive month. Spending at the online retailer grew by 11.3%, meaning it now holds 1.9% of the market.

Meanwhile, M&S, whose higher proportion of clothing and general merchandise in its sales mix means it does not fall under the definition of ‘grocers’ using the research group’s Till Roll methodology, saw its grocery sales increase by 10.5% in its bricks & mortar stores.

NamNews Implications:

• Brands promoted in January to pull back share from own label.
• (Possibly a continuing issue as retailers raise shelf prices in anticipation of Autumn Budget Tax increases)
• Retailers themselves may choose to reverse the brand/own label balance to 50/50…
• …to increase the appeal to brand owners as retail media grows.
• Tesco’s growth exceeding the grocery market continues to impress…
• While Aldi & Lidl’s rate of growth and increase in share has to be of concern to rivals.
• Meanwhile, the growth of the mults and discounters, largely at the expense of Asda and Morrisons…
• …has to add to the comeback pressures each.

Some Career-change Reassurance from the NamNews Team!