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J. Sainsbury’s is cutting 3,000 jobs as Britain’s second-largest supermarket chain accelerates cost-cutting after the Labor government raised taxes on employers in its October budget.
The job cuts, representing 2% of the group’s workforce, will result from the closure of the remaining 61 in-store cafes and significant changes to management levels.
Sainsbury’s said on Thursday that around 20% of its senior management staff are expected to be made redundant.
The decision comes after the company announced last year that it would cut costs by £1bn over the next three years.
The restructuring also comes amid what CEO Simon Roberts called a “particularly challenging cost environment” as retailers grapple with rising costs and taxes.
In October, Chancellor Rachel Reeves announced that employers’ national insurance rates would increase by 1.2 percentage points to 15 per cent from April, and the income threshold for tax would be reduced from £9,100 to £5,000.
Minimum wages are also expected to rise, further increasing cost pressure on employers.
Sainsbury’s faces a £140m tax hit from the Budget. Some of the workforce changes were partly driven by this, according to people familiar with the decision.
The grocery chain said it was overhauling the structure of its central management team at both Sainsbury’s and fellow group Argos stores “to support faster decision-making and improve performance”.
This will result in a smaller and larger role for headquarters with clearer accountability, the company said, adding that the changes will take effect in the coming months.
Roberts said the company was “forced to make difficult choices about where it could afford to invest and where it needed to change its ways of doing things to make the business more efficient and effective.” ” he said.
Clive Black, head of consumer research at Shore Capital, said Sainsbury’s would “increasingly need to take further steps following the Autumn Budget to manage its cost base to enable continued investment”. He said he made it.
“While extremely difficult, such measures are necessary for us, particularly given the significant escalation in procurement costs for the UK government,” he added.
