'Extreme challenges' force Co-op to axe hundreds of jobs

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The Independent Online

The Co-operative Group is to unveil hundreds of head office redundancies at its food business today, as it seeks to deliver efficiencies at a time of tough grocery trading conditions.

Staff were due to assemble at designated locations in Manchester, where it is headquartered, to learn their fate on an expected 200 to 300 job losses between 9am and midday.

The grocer has told staff to assemble at locations including the Printworks entertainment complex and Palace Hotel. Employees who work remotely were also thought to have been told to go to various regional sites to hear the grim news.

It is understood that the job cuts at the Co-operative Group, the UK's fifth biggest grocer, are not directly related to its trading performance. Under the leadership of the group chief executive, Peter Marks, the Co-op wants to deliver efficiencies in its back-office operations. These plans include streamlining and integrating functions such as IT and human resources across its business, which spans food, retail pharmacy and funeral care services.

None of the job losses will take place in the Co-op's 3,000 plus grocery shops. It plans to increase opening hours in food shops later this year.

The Co-op, which acquired Somerfield for £1.6bn in 2009, informed staff of the impending job losses last month, following a strategic review of its food business. The document said: "Cost reductions will unfortunately mean there will be a number of redundancies" but no figure was provided.

The Co-op said the changes were part of its move to a new operating model, in an attempt to drive efficiencies and remove duplication while lowering costs.

The Co-operative posted a 0.2 per cent fall in sales over the 13 weeks to 31 December.

In the memo last month, Sean Toal, the acting chief executive of food, said: "In common with other UK food retailers, we are continuing to face very extreme challenges in a market where customers are spending less. It is no exaggeration to say that our business is experiencing some of its toughest trading conditions in recent history and this is impacting on our financial performance."

Most of the big supermarkets are also battling to keep their underlying sales in positive territory.

Steve Murrells, from the Danish meat company Tulip, is to join the Co-operative Group as its food business's new chief.