Morrisons to cut 2,600 managers

18 June 2014 -

Following a 7.1% drop in quarterly sales, Morrisons is streamlining its in-store leadership teams to compete with budget supermarkets

UK supermarket chain Morrisons is laying off 2,600 management-level jobs, as it attempts to combat falling sales and market share. Out of its 126,000 staff, the roles most at risk include department-manager and supervisory positions within branches. However, the supermarket said that those who lose their jobs could be repositioned into around 1,000 jobs that it is set to create in Morrisons M local convenience stores, or 3,000 planned for new supermarkets.

Chief executive Dalton Philips promises that the changes will make the company more efficient, insisting it could improve customer service because more staff would be focused on serving shoppers. “This is the right time to modernise the way our stores are managed,” he stressed. “These changes will improve our focus on customers and lead to simpler, smarter ways of working.”

The Bradford-based firm has been under huge pressure to halt its decline after posting an annual loss of £176m in the year to February, plus a 7.1% drop in quarterly sales. Along with Tesco, Sainsbury’s and Asda, Morrisons is being squeezed by low-cost rivals such as Aldi and Lidl, and higher-priced chains such as Waitrose.

Morrisons’ latest staff review follows the supermarket’s announcement of £1bn in price cuts as part of its “I’m Cheaper” marketing campaign. By reducing the cost of 1,200 products by an average of 17% – thereby bringing its prices closer to discount rivals Aldi and Lidl – Morrisons hopes it can attract customers back to its stores.

In addition to expanding its presence in the convenience-store sector and modernising IT systems, Morrisons has doubled its efforts by launching an online facility. Morrisons.com replicates many in-store services and allows customers to make food deliveries from the web. The chain has added features such as a virtual butcher, enabling customers to choose how thickly their steak is cut, to separate the facility from rivals’ offerings. Yet its online arm has been viewed within the industry as a riskily late arrival.

While Morrisons’ shares grew by 3% following the news, union Usdaw argued that cutting 2% of its staff is a huge blow. National officer Joanne McGuinness said: “The next few weeks will be a worrying time for our members in Morrisons, and we will do everything possible to support them. Today marks the start of a 45-day consultation period, where we will look in detail at the company’s business case. Our priority will be to safeguard as many jobs as possible, maximise employment within the business and get the best possible outcome for our members affected by this restructuring.”

Image of Morrisons logo courtesy of JuliusKielaitis / Shutterstock

For further details and hints on management of change, check out CMI's resources.