Sainsbury’s is to cut 500 head office jobs while another 650 jobs are at risk as the supermarket closes one of its online grocery packing centres.
The UK’s second largest supermarket will also close offices in Coventry and Victoria in London and move out of two of the five remaining floors it occupies at its London head office in Holborn, another two floors at its Avebury office in Milton Keynes and one in Manchester as many staff permanently switch to working part-time from home.
Sainsbury’s said that its remaining office space would be adapted to create “collaborative workspaces” which would encourage greater flexibility when they reopen.
Supermarkets have been one of the main beneficiaries of consumer spending during the coronavirus pandemic, as locked-down shoppers spend extra money on groceries that they would usually have spent in pubs, restaurants and cafes.
But the surge in online shopping, which is less profitable than selling via stores, and the need to provide protective kit and additional staff to cover for those off sick or shielding during the pandemic have all hit supermarket profits.
From this month, supermarket sales are expected to begin falling compared with last year when sales surged as families prepared for the first lockdown. Sales are also likely to take a hit once pubs, cafes, restaurants, school canteens and workplaces start reopening.
The majority of workers at the group’s “dark store” fulfilment centre in Bromley-by-Bow, London, which was the first to open in 2013, are expected to shift to working in Sainsbury’s stores. By March next year, more than 20 stores in and around the capital are expected to expand their online packing capabilities, enabling Sainsbury’s to deliver thousands more orders each week.
The changes come after Asda announced plans to shut two of its online warehouses and reduce head office roles, putting about 5,000 jobs at risk. The supermarket is switching from its dark stores in Dartford, Kent, and Heston, west London, to picking grocery orders from the shelves of local stores.
Sainsbury’s chief executive, Simon Roberts, said: “Our new plan puts food first and will create a simpler, nimbler and more efficient business. The money we save will enable us to invest in what customers really care about – lower prices, exciting new products and the most convenient ways for them to shop.
“It is vital that we adapt. I understand this will be a very difficult time for affected colleagues and we will do everything we can to fully support them.”
He said Sainsbury’s was now able to serve 850,000 online customers a week, having doubled capacity in the past year, and the shift to delivering from stores would help the supermarket adapt more quickly to changes in demand.
The cuts are being made despite Sainsbury’s upgrading profit expectations by £60m in January after surging sales of champagne, steaks and other luxury food drove stronger than expected sales over Christmas and new year.