Tesco to slash 2,000 distribution jobs

Grim news for Tesco workers: some 2,000 jobs are to be lost across the company's 32-strong UK distribution centres. There may be new job opportunities for some as the company works to overhaul its network.

But the employment uncertainty for many of the supermarket's employees could be considerable.%VIRTUAL-SkimlinksPromo%


Jobs pressure

Tesco says it has been reviewing its distribution network and confirms it plans to shutter some of its current distribution centres "and open new ones that will give our customers a better service and improve working conditions for our colleagues."

"Colleagues," says Tesco, "who are affected will be offered jobs at other Tesco sites, including at the two new distribution sites we have confirmed that we will be opening, in Reading and Dagenham. Two thousand jobs will be created at those sites."

Last year Tesco chief exec Richard Brasher said the company was committed to creating 20,000 new UK jobs between 2012 and 2014. "This is net job creation," he said at the time, "although we will continue to run our business as efficiently as we can, this is a determination for this to be net new jobs."

Better times?

Tesco appears to be slowly re-flating itself after a torrid two years. Latest Kantar Worldpanel numbers show that for the 12 weeks up to 20 January, Tesco clung onto its 30.4% year-on-year market share while powering ahead - just - of Sainsbury's as far as sales growth (+3.3% versus +3.2%) goes.

Those numbers can't hold a candle to Aldi numbers. Despite being a minnow in comparison, Aldi sales saw +28.2% sales rise for the quarter up to 20 January. However Tesco investors will be watching the company share price (365.0p at time of writing), which has crept steadily forward since mid October when its shares sunk to 310p.

Meanwhile the supermarket sector is battling to hang onto consumer trust following the horse meat scandal. "The entire industry is facing a new reality," says Sainsbury boss Justin King, writing in the Telegraph. "Trust has been severely damaged. The horse meat scandal has identified potential weaknesses in the food supply chain that must be addressed with urgency and rigour."

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Tesco to slash 2,000 distribution jobs

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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