Sainsbury's to axe 2,000 jobs as part of cost cutting plan

British grocery giant Sainsbury's was gearing up to cut 2,000 jobs across its UK stores and back offices, hoping to save more than £500m in the process, as the firm's price war with discounters such as Aldi and Lidl rumbles on.

Sainsbury's announced on Wednesday that its HR department would be restructuring the group in order to get rid of 1,400 roles from its storefronts, plus another 600 positions based in its back offices that also serviced Argos and Sainsbury's bank.

A spokesman for the retailer said, "The UK grocery market is changing at a rapid pace and it’s crucial that we transform the way we operate to meet future challenges and continue to provide customers with best in class service."

Similar downsizing efforts had been announced at Tesco, which in June axed 2,300 staff, and Asda last month, as the more established retailers seek to cut costs to compete with rapidly expanding German discount operators Lidl and Aldi.

Sainsbury's, which employed approximately 119,000 full-time staff in the UK, said the cost-cutting would begin when its previous three-year plan aimed at saving £500m ended in March 2018.

"Following a comprehensive review, we are proposing some updates to our HR structures and systems, as well as changes to a number of other support roles," added Sainsbury's.

"This has been a difficult decision and we appreciate that this will be a tough time for those colleagues affected by the changes."

Under the direction of chief executive Mike Coupe who joined the grocer in 2014, Sainsbury's aimed to broaden its market share with the £1.4bn purchase of Argos in April 2016, as it reduced it's dependence on the highly competitive retail grocery market and gave the group access to Argos' expedited delivery network.

Earlier in the week, Tesco, Sainsbury's, Asda and Morrisons, also known as grocery's Big Four, were shown to be continuing to lose ground to discounters, with Aldi and Lidl contributing the entire grocery market's volume growth in recent weeks.

Supermarket sales increased in value by 3.1% in the 12 weeks to 8 October, research from Kantar Worldpanel showed on Tuesday, with Lidl and Aldi providing half of this growth.

A rival report from Nielsen on Tuesday showed grocery sales rise 3.9% in the four weeks ending 7 October, with the volume of goods sold increased by just 1.6% and if the discounters were excluded volumes would not have increased at all.

Clive Back, an analyst at Shore Capital, said, "The reality is that like many large companies Sainsbury was bloated, too corporate, too slow and too far detached from the realities of the marketplace."

"As such, we can understand in the big scheme of things why this is a correct course of action and so welcome to the stock market," he added.

But as of 1045 BST, shares had dropped 1.25% to 244.60p.