Co-op staff braced for more redundancies

The Co-operative Group is preparing to further slash its food division’s workforce, as it seeks to cut costs amid tough trading at its grocery operation.

The mutual business has told the food division’s property team, which has 200 staff, to expect a restructuring next month. The expected job cuts would be in addition to the 300 redundancies at its headquarters in Manchester unveiled in February.

There is also speculation internally that the group plans to close its Scotland and Northern Ireland office, which employs up to 100 in Glasgow, largely in facilities management.

The group’s banking division announced 187 redundancies last week.

The job cuts come at a testing time for Peter Marks, the chief executive of the Co-operative Group, which has grown rapidly over the past three years, including the acquisitions of the grocer Somerfield and the building society Britannia in 2009.

Its banking division is currently seeking to acquire 632 branches from Lloyds Banking Group. Lloyds will update on the process later this month.

The job cuts in the food property team are part of its Unity Programme. This is the Co-op’s project to deliver a more co-ordinated strategy and efficiencies across over 4,800 retail trading outlets, including pharmacy, banking and funeral care. The food division’s senior managers have told lower-ranked staff not to expect a bonus, as the grocery business did not hit its targets for the year to 31 December 2011. This is largely due to the weak performance of the 600 former stores of Somerfield, which the Co-op acquired for £1.6bn in March 2009.

According to an internal memo, like-for-like sales at the Co-op’s food business fell by 0.59 per cent over the 11 weeks to 17 March. It no longer internally breaks out sales at the Co-op and former Somerfield shops.

A source cited frustration at the increasing workload and pace of change, and questioned the strategic direction of the food business.

A Co-op spokeswoman said: “The Co-operative Group has been transformed under the leadership of Peter Marks and next week we will announce our annual results, which will show the further progress we have made in spite of the tough consumer downturn.”

The Co-op delivered record profits of £414.4m over the year to 1 January 2011, on turnover of £13.7bn.