Supermarket giant Sainsbury’s has announced a significant restructuring plan that will result in 3,000 job cuts across the business. The decision includes the closure of all remaining cafés, patisserie, pizza, and hot food counters, and a 20% reduction in senior management roles.
The company says the changes are necessary to streamline operations, as most shoppers no longer use its café services regularly. It also pointed to a "particularly challenging cost environment," including the rising National Insurance (NI) contributions outlined in the recent Budget.
The Budget, introduced by Chancellor Rachel Reeves, includes an increase in employer NI contributions to 15% starting in April, alongside a reduction in the salary threshold for contributions from £9,100 to £5,000. Sainsbury’s estimates these measures will cost the business an additional £140 million annually.
In response, Downing Street defended the tax hike, calling it a necessary measure to stabilize public finances. However, critics argue it places undue pressure on businesses. Shadow business secretary Andrew Griffith described the Sainsbury’s cuts as “devastating but no surprise” and called on the government to "undo its jobs tax."
The latest cuts represent the second wave of major job losses at Sainsbury’s in just over a year. In February 2024, the company announced 1,500 redundancies. Now, it plans to shut down the remaining 61 cafes and all patisserie, pizza and hot food counters.
Instead of these counters, Sainsbury’s plans to offer "popular items available in the aisle." Jobs will also be lost in head office roles as the company reorganizes its divisions to improve efficiency and reduce costs.
The Unite union has condemned the move, accusing Sainsbury’s of "profiteering on the backs of workers." Paul Travers, a Unite officer, said the supermarket should be "ashamed" for implementing job cuts while reporting record profits.
Despite these criticisms, industry experts suggest these cuts are part of a broader trend in retail. Catherine Shuttleworth, CEO of retail marketing firm Savvy, predicted further cuts across the sector, citing increased labor costs following the Budget.
Earlier this month, Sainsbury’s reported strong Christmas trading and forecasted annual profits exceeding £1bn. However, CEO Simon Roberts warned that rising costs necessitated "tough choices" to ensure the company’s future stability.
To help offset inflationary pressures, Sainsbury's has committed to raising average hourly wages by 5% to £12.60, implemented in two phases. However, some analysts argue that such wage increases further squeeze already tight profit margins in a challenging retail landscape.
As the retail sector grapples with higher operational costs, Sainsbury’s actions may signal broader challenges ahead for the industry. The British Retail Consortium warned that increased costs for retailers will likely impact investment, jobs, and lead to higher prices for consumers.
