Restructuring to save costs in retail

Tesco has announced that it will be reviewing its management structure in stores leading to a number of potential redundancies. Restructures of this nature can have a profound impact on employee morale as promotion and recognition opportunities are reduced, however, they can be an effective way of saving costs with reduced impact on customer experience. It is important for employers embarking on restructures of this kind to consider the long term impact on the workforce and how they can mitigate the impact on retention and engagement. It has been reported that Tesco are offering alternative shift leader positions with financial compensation. Whether this will be enough to mitigate the loss of status and opportunity for promotion will depend on how engaged and embedded the employees are with their employer in the first place.  

Changes on this scale may trigger collective consultation obligations and effective communication is key. If collective consultation is not triggered due to the numbers at each establishment (which is often the case in retail) our advice would still be to consider carefully your communication plan and how this will be actioned. Consider speaking with a small number of employees to obtain feedback on your communication plan to help inform you that the messaging will be received as you intend.

It's also sad to see that Tesco may be on the brink of purchasing Paperchase, but bringing the brand in house meaning a very uncertain future for Paperchase's 100 stores and the circa 1000 employees.

We are starting to see a steady parade of this kind of pre-pack sale, like in the case of MADE.com where the brand is snapped up but the stores and employees are not required. Whilst just six months ago we were discussing a crisis in recruitment in the retail and hospitality sector, these closures and restructures are likely to mean that there will be a ready supply of workers in the market place for those employers who have the right recruitment strategies in place to attract them to their businesses.

The retailer plans to instead introduce around 1,800 shift-leader roles, responsible for leading the day-to-day operational duties on the shopfloor, and realigning manager roles to focus on overall store performance, making the job more equal across its estate.

Workers impacted by the changes will be offered the option of moving into shift leader vacancies with financial support or taking redundancy.”