Tesco squeezes store managers as food price inflation soars

There’s trouble at the Tesco mill. Britain’s biggest supermarket has just announced “store changes helping us to remain competitive”.

Are we ever going to see a straightforward announcement? Something like: store restructuring puts 1,750 jobs at risk. This would be appropriately corporate while putting the real story front and centre. Still, to those of us who’ve been reading press releases for a while, the words “changes” and “competitive” spell “trouble” and “bad news for workers”.

The story here is that Tesco is shaking up its store management roles to save money. This will involve the creation of a new tier of “shift managers” with a corresponding reduction in “lead” and “team” managers.

Needless to say, the current jobs pay more than the replacement roles. Those affected will have the option of taking a hit, with the offer of a temporary financial buffer, or accepting redundancy.

In-store counters – delis, fishmongers – will also be phased out where they are still operating; no job losses will flow from that move, although it remains to be seen if customers will respond well to losing one of the few points of difference between the likes of Tesco and growing discounters such as Aldi.

On the face of it, Tesco’s plan looks quite different to what Asda is doing. Last week it emerged that more than 4,000 nightshift workers there are being moved to lower-paying daytime roles with 300 night manager and pharmacy jobs at risk of redundancy.

But the trigger is the same. Kantar’s measure of food price inflation hit a record 16.7 per cent on Tuesday, adding an average £788 to annual family shopping bills, a truly hellish number.

The grocery sector faces managing the expectations of shoppers, shareholders and workers. In the case of the latter, they’ve had to raise base salaries considerably to secure the staff they need to operate their stores in a country beset with labour shortages. So they’re seeking other ways to pare down the costs of staff salaries, either tweaking the ladder by making moving up less attractive but less costly (Tesco) or by altering shift patterns (Asda).

It is possible this move could backfire on Tesco, which risks losing bright ambitious people if they feel they have to move on to further their careers. But that Kantar data makes clear that something has to give.

It was Tesco’s chair John Allan who last year expressed his dismay at customers asking checkout operators to stop scanning at £40 because they could not afford to spend any more. He called for a windfall tax on energy providers. Allan has more recently taken aim at suppliers, saying the group had “fallen out” with some unjustified price rises. Those comments caused quite the controversy on planet retail.

Regardless of whether you buy Allan’s line or not, it is clear that a government howler – Brexit – is playing a role in food price inflation and Britain’s wider economic malaise. The IMF has just downgraded its forecasts. Brexit (again) is part of the reason, said the Institute for Fiscal Studies.

The consolation for the consumer, small though it is, is that the grocery sector does at least remain competitive. The supermarkets continue to butt heads in pursuit of customers. As they never knowingly underpay shareholders, it seems workers on something better than the entry level are going to be asked to take the strain. I doubt this will be the last time we see this sort of announcement from one of the big players.