It speaks volumes that jaws no longer hit floors at Retail Week Towers when announcements of four-figure job losses are made.
While such rounds of redundancies will always be incredibly sad for those involved, restructuring has been the order of the day for a number of years as retailers adapt to a rapidly changing trading environment.
The rise of online, the apparently unstoppable onslaught of Amazon, the national living wage, the apprenticeship levy, business rates and a spike in sourcing costs following the slump in the value of the pound, have combined to create a perfect storm of margin and profit headwinds.
Tesco’s latest revelation today that it is axing 1,200 jobs – a quarter of its centralised workforce – across head office functions, followed an already well-trodden path in the industry.
The Asda example
It is one thing striving to be lean, it is another entirely to be malnourished. Just ask one retailer whose cuts arguably went too deep – Asda.
“It is one thing striving to be lean, it is another thing entirely to be malnourished”
For a number of years earlier in the decade, the Walmart-owned grocer protected profit at the expense of sales growth and staffing levels, axing thousands of jobs across stores and head office operations to preserve its bottom line.
Admittedly, many of the redundancies Asda made were necessary to reshape the business and make it fit for the modern, multichannel retail world – a goal Tesco alluded to in today’s statement.
But as Shore Capital’s Clive Black so eloquently put it when discussing Asda earlier this year, “not only fat but muscle was cut out in recent years to the detriment of the retail offer.”
Asda’s quality, availability and customer service consequently suffered, as seemingly dispensable members of staff were handed their P45s.
Aside from making it harder for Asda to arrest falling sales, those redundancies created two further problems.
First off, perhaps the skillset and experience of those who lost their jobs made them more indispensable than Asda initially thought. After all, you don’t know what you’ve got ’til it’s gone.
Asda’s loss would have proved gains for the likes of Tesco, Sainsbury’s, Morrisons and the Co-op, who were ready to pounce on the talented workers left on the retail scrapheap.
And the cuts would no doubt have left the feathers of their closest Asda colleagues somewhat ruffled, hammering the morale, enthusiasm and loyalty of remaining staff.
It is a point former Waitrose boss Mark Price makes in his new book, Fairness For All.
In an extract published by Retail-Week.com earlier this month, Price discusses the move of an unnamed listed retailer – therefore ruling out Asda – to strip out a layer of store management that was responsible for planning replenishment.
“Two thousand out of five thousand managers in this tier had left the business,” Price recalls.
“The chances are that the most competent workers would have dusted off their CVs and moved on within days of the announcement.
“Either way, this organisation lost two fifths of its talented and trained workforce with barely a backwards glance.
“Between them these employees had thousands of hours of experience and knowledge.”
In this latest instance, Tesco is losing 25% of its workforce across the Welwyn Garden City and Hatfield offices.
They will all be talented individuals, boasting “hours of experience and knowledge” Price refers to by the bucket-load.
If they weren’t in that mould, they wouldn’t have got their various jobs at Britain’s biggest retailer in the first place.
Tesco, therefore, would not have taken this decision lightly – particularly at a time when it is building up a considerable sense of confidence and trading momentum.
But, if Asda’s example is anything to go by, it could be a decision it lives to regret.