Supermarket price wars claim 2,000 jobs as Big Four cut costs

Morrison fires chief executive Dalton Philips after he fails to counter new players such as Aldi

Dalton Philips was criticised for moving too slowly with online shopping at Morrisons (PA)

Sainsbury’s and Morrisons have capped off a disastrous week for supermarket workers as nearly 2,000 jobs were lost across the UK high street in the clearest sign that the Big Four supermarkets are feeling the effects of shoppers’ shifting demands.

Morrisons announced yesterday that 409 jobs would go across 10 unprofitable stores it is closing, while Sainsbury’s said 500 staff would be leaving its head office.

These follow last week’s announcement by Tesco’s new chief executive, Dave Lewis, that 43 unprofitable stores would shut with potentially about 1,000 jobs lost.

The most high-profile redundancy was Morrisons’ chief executive, Dalton Philips, who was sacked by the supermarket’s new chairman, Andy Higginson, after a disappointing five-year reign.

Mr Higginson, a former Tesco finance director, also revealed that he will take up the position in a fortnight, nearly six months earlier than expected.

Mr Philips will leave in March and could walk away with £2.6m plus any outstanding long-term share payouts. He said he was saddened by the decision but understood why it was made. “I’m sad I’m leaving. I’ve put a lot in but when a board wants to make a change you accept it and move on,” he said yesterday. His replacement has not yet been named.

Asked whether he felt he could have done more during his time at the UK’s fourth-biggest supermarket, he said: “I’ve never met a retailer than didn’t think they could do a lot more.

“If you don’t make wrong decisions you’re not making right decisions. There are 100 things commentators will say I got wrong but hopefully 101 things that I got right.”

Mr Higginson said Mr Philips had brought in the correct strategy for Morrisons, but suggested it had been too little, too late and that his position had become untenable.

He said: “The board has obviously had this as a topic for some time. We’ve really focused the conversation over the last few months… but sadly it is time for a fresh pair of eyes to get some trading momentum back in the business.”

The market welcomed the decision to show Mr Philips the door as Morrisons’ shares jumped 4.5 per cent to end the day at 184.8p. Mr Higginson also helped by snapping up a £500,000 stake in the business.

Since joining the supermarket in 2010, Mr Philips has been criticised for not moving fast enough in the early years to keep up with the changing industry, launching an online and convenience store offering only in the past two years and at considerable cost.

Two profit warnings last year and a public mauling from life president Sir Ken Morrison at the company’s AGM sealed his fate.

The Bradford-based business has been one of the biggest losers in the rise of the discounters Aldi and Lidl, with Morrisons’ customers switching across its northern heartland.

Yesterday, the latest Kantar Worldpanel supermarket data showed the growth of Aldi and Lidl continues unabated, rising 22.6 per cent and 15.1 per cent, respectively, in the 12 weeks to 4 January, although this was slower than in previous periods.

Sainsbury’s was the big winner from Christmas, with sales falling the least among the Big Four, as it overtook Asda as the second-largest grocer for the first time since 2003.

However, this will be a pyrrhic victory for an estimated 500 staff at store support centres in London, Coventry and Manchester, who will lose their as part of chief executive Mike Coupe’s new strategy to cut prices and spending.

Dalton’s days: Highs and lows

Highs

* Reports record profits of £947m in 2011

* Opens first convenience stores

* Successfully launches online partnership with home delivery specialist Ocado

* Updates in-store technology and systems

* Loyalty scheme makes Morrisons the first Big Four supermarket to price match Aldi and Lidl

Lows

* Kiddicare maternity chain, bought for £70m, is sold for £2m just three years later

* Strategy is publicly ridiculed as ‘bull****’ by founder Sir Ken Morrison

* Huge profit warning just after Christmas 2013

* Forced to issue another profit warning last March

* Profits sink from £858m in the year he joined to a £176m loss last year