UK's Tesco is currently embarking on a fresh round of aggressive cost-cutting in its supermarket business that could eliminate thousands of jobs and its in-store Deli counters. Their latest plan reportedly involves the closure of meat, fish, and delicatessen counters as well as downgrading in-store bakeries. Staff canteens are also to be replaced with vending machines, with suggestions of up to 15,000 jobs at risk. The cuts are part of a plan to slash £1.5bn from Tesco's cost base as chief executive Dave Lewis tries to rebuild profits which have never recovered from the 2014 accounting scandal.
The report suggested some counters would close while others would have opening hours cut. The plans would affect most of Tesco's 732 largest stores. Since Lewis took over in 2014, there have been successive rounds of job cuts. This time last year, 1,700 employees were affected when the retailer stripped out a layer of middle management. It also closed its Cardiff call centre with a loss of 1,100 jobs. With over 300,000 UK employees and more than 3,400 stores, Tesco is the UK's biggest private sector employer but its business model is under attack from the fast-growing German discounters Aldi and Lidl. Bryan Roberts, global insights director at research firm TCC Global, said getting rid of Extras such as deli counters would “alienate” some shoppers and remove a key point of difference with the discounters. “These counters don't contribute a lot to sales but the shoppers who do use them typically spend more and are more loyal. It's part of the aura of being a fresh food grocer and you lose something if you take them away.”
Last year, Tesco launched new discount chain Jack's in a bid to stem the flow of stoppers to cheaper rivals but sales figures from the key Christmas period revealed massive changes in shopping habits has taken place in the UK with two-thirds of households heading to Aldi or Lidle for some festive fare. Tesco could also lose its market leadership this year if the competition watchdog approves Sainsbury's plan to buy Asda. Tesco said, “We're always looking at ways to run our business more simply and efficiently. Whenever we make changes in our business, colleagues are always the first to know.”
