‘While it’s easy to blame the Budget, retailers shouldn’t let it become the new “unseasonable weather”’

Thursday was a tough day for the retail industry as first Sainsbury’s then Morrisons and finally River Island all announced job cuts on the same day.

While it is always sad to see retail jobs go, regardless of the context or reason, what’s potentially worse is that these lost jobs will become the latest political football in the ongoing debate over Labour’s divisive October Budget.

The main headlines were dominated by Sainsbury’s announcement that it would be making some 3,000 staff redundant as it moves to shutter its remaining hot food and pizza counters and own-brand cafes in favour of more aisle space and third-party food halls.

While 80% of the cuts will fall on frontline staff, what was also notable was the number of jobs to go in head office – the grocer said it was looking to reduce senior management headcount by 20% over the next few months.

3,000 is a big round number and has been latched onto by critics of the chancellor and the Budget, as the beginning of a business-wide bloodletting directly linked to increased taxes. Despite the big round number, it only represents around 2% of Sainsbury’s total workforce.

Sainsbury’s detractors meanwhile could question how the cuts can be justified, coming as they did just weeks after the grocery giant reported its “best ever Christmas”, and is sitting on a billion pounds of profit for the financial year.

Rather than being dragged into the Budget culture wars though, the latest round of cost cutting at Sainsbury’s is better understood in the context of Simon Roberts’ relentless focus on his ‘Food First’ strategy.

He has long been looking to strip food and pizza counters and cafes out of supermarkets because they are unprofitable, and take up otherwise good aisle space to sell the things that Sainsbury’s does make money on – i.e. groceries.

To that end, Roberts and Sainsbury’s previously made the tough decision to make 1,500 staff redundant in February 2024. Having made another 3,500-odd staff redundant in November 2020, at the height of the pandemic.

The cuts at Morrisons are, by contrast, smaller with 200 jobs to go across what the grocer called its retail people team – which covers jobs in customer experience, employee engagement, recruitment and payroll.

While Morrisons is due to update on its Christmas trading period on Wednesday, the most recent Kantar grocery market share data shows that the festive period might not have been quite so jolly in Bradford as it was at 33 Holborn – with sales in December inching up 0.4%.

While neither Sainsbury’s Roberts nor Morrisons’ boss Rami Baitiéh blamed last year’s contentious Budget directly for their respective decisions to slash jobs, the spectre of added costs associated with it clearly loom large in both of their decision making for this year.

Roberts said the job cuts would “streamline” Sainsbury’s decision-making processes, to “drive faster decision making and bring costs down”.

The Morrisons’ statement didn’t mention costs directly but, in the days leading up to the announcement, Baitiéh lashed out at the “avalanche of costs” hitting business following October’s Budget.

No one is suggesting that the Budget and the changes to national insurance haven’t made an already difficult business environment that bit tougher for retailers.

There’s also precious little evidence so far that the changes are going to unlock the kind of growth Labour and the chancellor are so desperate to see. Nor has it done anything to improve dire consumer confidence, which has still yet to rally from the cost-of-living crisis.

Despite all of this, retailers mustn’t seek to use the Budget as a catch-all excuse for poor trading or other issues in the coming weeks and months. 

The sector should be wary of letting the Budget become the new ‘unseasonable weather’. The job is done, and the die has been cast. Retail has faced bigger challenges over the last few years and has risen to the occasion every time.