Marks & Spencer is cutting 7,000 jobs overthe next three months across its stores and management.
It said the coronavirus pandemic had made it clear there had been a
“material shift in trade”.In-store sales of clothing and home goods were “well below” 2019,although online and home deliveries were strong.
M&S said it hoped a “significant proportion” of the cuts –about a tenth of its workforce – will be voluntary redundancy and earlyretirement.
In a statement, M&Ssaid it was “too early to predict with precision where a new post-Covidsales mix will settle. We must now act to reflect this change”.
But the retailer said operating during the pandemic had showed it could work“more flexibly and productively”, with more staff multi-tasking andmoving between food, clothing and home departments.
M&S said total sales in its hard-hit clothing and home arm plunged 29.9%in the eight weeks since shops reopened, with store sales tumbling 47.9% andonline surging 39.2%.
In the last 13 weeks, food sales have increased by 2.5%.
At the height of lockdown, M&S boss Steve Rowe said customers might“never shop the same way again” after the coronavirus crisis.
And last month the retailer announced 950 store management and head officejobs were at risk because it needed to accelerate its restructuring.
Alongside Tuesday’s announcement of more job cuts Mr Rowe said: “In Maywe outlined our plans to learn from the crisis, accelerate our transformationand deliver a stronger, more agile business in a world in which some customerhabits were changed forever.
“Three months on and our ‘Never the Same Again’ programme isprogressing; albeit the outlook is uncertain and we remain cautious.
He said the proposals to “further streamline store operations andmanagement” were an “important step in becoming a leaner, fasterbusiness set up to serve changing customer needs”.
Retail Economics chief executive Richard Lim said the cuts represented a“massive reduction” in the M&S workforce. The retailer was“desperately attempting to reposition the business towards a new-normalemerging in the sector”.
“Retailers were already battling with the pace of structural changefacing the sector but the impact of the pandemic has been a step-change for theindustry.”
He said retailers remained in “survival mode, preserving cash andhanging on for more sustainable levels of demand to return”.
“But the way we shop has changed on a permanent basis for many parts ofthe sector almost overnight.
“The reality is that many more retailers will fail and the number ofjob losses will ramp up as government support is withdrawn. This is the calmbefore the storm.”
Marks and Spencer has been in the throes of a big reorganisation of one sortor another for most of the past two decades.
Successive management teams have struggled to come to terms with rapidshifts in consumer behaviour – but none so rapid as what has happened over thepast four months.
M&S had already begun what looked like it most serious restructuring inyears before the pandemic struck, with a big drive to boost online sales –notably with a partnership with Ocado – and to close underperforming stores.But those plans, drawn up by Chairman Archie Norman and Chief Executive Steve Rowe,have been accelerated by the coronavirus.
The bigger question now is whether the drastic action now being taken isenough to cope not only with the sudden decline in sales brought about by thepandemic, but the longer-term shifts that have so vexed M&S management inthe past.
The size of the job cuts suggests that M&S is at least taking thosethreats seriously.
M&S employs almost 78,000 people, most of them in the UK. The bulk ofthe latest job cuts are expected to come among shop floor workers, with about12% of customer assistant roles going.
Cuts will also be made at head office and in regional management.
However, the company is shifting resources and recruiting towards areas thatare expanding – online and food.
M&S has recently taken on 150 new staff in a new online warehouse atCastle Donington, and is looking to employ 360 people at a new food
distribution centre in Milton Keynes.