Sainsbury's to cut 3,000 jobs and shut cafés

British supermarket chain Sainsbury's has announced it will cut 3,000 jobs while also closing its remaining cafes, patisserie, and pizza counters. The company stated that this move is aimed at "simplifying the business," noting that most Sainsbury's customers "do not frequently visit the cafes." Furthermore, Sainsbury's plans to reduce senior management positions by 20%, citing a "particularly challenging cost environment."

Although Sainsbury's is already implementing a plan to save £1 billion over the next few years, the BBC understands that an increase in employer National Insurance contributions in the budget is also a factor in this restructuring plan. Meanwhile, competitor Morrisons has also announced plans to cut 201 office jobs. A Morrisons spokesperson stated that they plan to "remove roles of Regional People Managers, Store People Managers and Case Partners from our structure, meaning that colleagues in these roles are at risk of redundancy."

In response to Sainsbury's announcement, Downing Street stated, "As we said in the budget, difficult decisions need to be taken to restore economic stability and put public finances on a stable footing." Sainsbury's recently reported strong Christmas trading figures and stated that it expects annual profits to exceed £1 billion. However, CEO Simon Roberts, when announcing the trading figures earlier this month, reiterated warnings about the impact of measures announced by Chancellor Rachel Reeves and said there would be "tough choices." Sainsbury's stated that the increase in employer National Insurance contributions would cost it £140 million from April.

Industry trade body the British Retail Consortium believes that increased costs for retailers will impact investment, jobs, and lead to higher prices. Shadow Business Secretary Andrew Griffith described Sainsbury's job cuts as "devastating but not surprising," adding that the government should "scrap its jobs tax." In the budget, Reeves announced that the rate of National Insurance paid by employers would rise to 15% in April, while the threshold at which it starts to be paid would fall from £9,100 to £5,000. The government expects this move to raise £20 billion.

Earlier last year, the previous Conservative government twice cut National Insurance paid by workers, reducing the rate by a total of 4% at a cost of billions of pounds. This is the second major round of job cuts at Sainsbury's in just over a year. Last February, the company announced it would cut 1,500 jobs. The supermarket group, which owns Argos and Habitat, will close its remaining 61 cafes, as well as pizza and patisserie counters, and will also remove hot food counters. Instead, it will "offer the most popular items on the shelves." As part of its departmental and management refresh, Sainsbury's head office will also see job losses in order to "drive faster decision-making and reduce costs."

Two weeks ago, Sainsbury's said it would increase average hourly pay by 5% to £12.60. However, the pay rise will be implemented in two stages in order to "help navigate a particularly challenging cost inflationary environment." The Unite union has described the job cuts as a "blatant example of squeezing profits from workers." Unite's national officer for food, Paul Travers, said supermarkets should be "ashamed" for cutting jobs while making millions of pounds in profits.

However, Catherine Shuttleworth, CEO of retail marketing company Savvy, said that Sainsbury's job cuts "are likely to be the first of many in the retail sector." Ms. Shuttleworth said: "As expected, services for shoppers will reduce as retailers struggle to deal with the increased labor costs caused by the budget. But it is clear from Sainsbury's announcement that retail organizations will have to make tough decisions at all levels of their organization, both in store and behind the scenes at head office."

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