Sainsbury cuts 650 jobs

J SAINSBURY, Britain's biggest grocer, is axing 650 head office jobs as part of a restructuring programme designed to help it to cope with increased competition among food retailers.

The job cuts, which represent almost a fifth of the 3,500 employees in its head and area offices, follow a review of the business aimed at improving service, simplifying operations and removing duplication and overlap of functions.

The programme is expected to cost between pounds 10m and pounds 20m but, together with other efficiency improvements, should save pounds 50m by next March.

Sainsbury is the latest food retailer to take action to protect profits in the wake of fierce price competition on the high street.

In January, Tesco announced it was to cut 800 head office and distribution jobs, a tenth of that workforce. William Low has announced similar cuts among its 400 head office staff. Argyll, owner of Safeway, is also expected to announce job cuts.

Competition for customers, exacerbated by aggressive expansion in the number of stores during the 1980s, is forcing all the big food retailers to cut prices sharply to keep sales volumes moving ahead. That has meant a search for ways to cut costs to preserve their profit margins.

Sainsbury has cut the price of more than 300 basic foodstuffs under its Essential for Essentials campaign. Despite that, its like-for-like volumes fell 1 per cent in the 16 weeks to 15 January.

Its job reductions will take place over the next six to eight months, although it said it would try to redeploy staff where possible. It is also offering a voluntary redundancy scheme to employees over 50.

Sainsbury shares fell 8.5p to 359.5p.