Sainsbury's boss refuses to rule out job losses as chain cuts costs by £1bn
The boss of Sainsbury's has not dismissed the possibility of job cuts as part of a plan to reduce costs by £1 billion.
This comes as the supermarket chain announced it will decrease its general merchandise and clothing space while increasing its food offering. Sainsbury's, the UK's second largest supermarket, revealed a strategy that includes expanding food space in all its nearly 600 supermarkets.
However, this will also mean reducing non-food ranges in many stores, with 20% to 30% less store space for these items in 180 shops. The company hinted at potential job losses as it plans to cut costs by £1 billion over the next three years. This will be achieved through investment in technology and artificial intelligence (AI).
CEO Simon Roberts did not rule out job losses as the company plans to use AI to increase automation. He stated that the company would aim to "protect jobs as much as possible" by being flexible and to "re-skill" and "re-deploy where we can". However, he emphasised that "we have to become more efficient", with automation playing a key role in achieving savings, boosting productivity and reducing food waste.
"High-returning investments in technology and automation will drive big steps forward in efficiency automating, optimising and prioritising high-volume tasks and driving better forecasting," Sainsbury's said. The supermarket giant confirmed it had no plans to shut stores under the overhaul, but will continue with previously-announced plans to close more standalone Argos shops and bring them within supermarkets as click-and-collect points.
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Sainsbury's has already closed a number of Argos stores to bring many within supermarkets since it bought the company in 2016, announcing late last year that it would reduce the estate to 180 by March. "We have further to go in terms of Argos store estate changes and we will also further refine the store operating model, with clustered stores replacing a one-size-fits-all approach," the group stated.
Mr Roberts added the group will "keep looking at our (Argos) store estate", but said it needed to retain a number of standalone stores, particularly where there is not a Sainsbury's supermarket or convenience store nearby. The strategy revamp, named Next Level Sainsbury's, will see it look to attract more shoppers into its stores by increasing its fresh food ranges, expanding rapid electric vehicle (EV) charging points and ramping up Nectar loyalty card offers.
Sainsbury's revealed it only has a full food range across 15% of stores currently. The shop will roll out more ready-to-go meals, like its Kitchen Deli range. It will also include charcuterie and cheeseboard products.
In a recent update, Sainsbury's shared that it will "tighten the focus" of its non-food ranges, reducing duplication of products sold in Argos stores within supermarkets. They also plan to open 75 new convenience stores, adding to their current lot of 821.
£70 million will be spent on installing rapid EV charging points in over 100 stores by end of the financial year 2024-25, increasing from the current 27. The CEO said: "We're determined to be first choice for food, ensuring more customers in more of our stores can enjoy more brilliant Sainsbury's food. That means more space for our food offer, while still delivering the general merchandise products customers want from us."
They are also aiming to expand their Nectar loyalty offering, hoping it will bring in another £100 million of profit by March 2027. A £200 million share buyback programme will be launched next financial year as they aim to increase returns to shareholders along with these plans.
Just last month, the company announced it will cease its banking operations to concentrate on retail. Shares in the supermarket have fallen by more than 4%. William Woods, a retail expert at Bernstein, said the strategy update was "more evolution than revolution". He also mentioned that the "commitments are a bit fluffy, such as delivering profit leverage from sales growth".
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