Sainsbury’s to cut 3,500 jobs and close 420 Argos stores

Thousands of workers on deli counters and in standalone Argos stores to be made redundant as supermarket chain shifts business model to deal with increased online sales

The company announced a loss before tax of £137m

Sainsbury’s has confirmed it will cut about 3,500 jobs across its Argos stores and supermarket meat, fish and deli counters as it adapts to a rapid shift towards online shopping.

The retailer said it will close 420 standalone Argos stores over the next four years, opening up 150 to 200 collection points within its supermarkets. All of Sainsbury’s meat, fish and deli counters will close. 

Announcing the cuts on Thursday, Sainsbury’s chief executive Simon Roberts said that “Covid-19 has accelerated a number of shifts in our industry”.

Almost 40 per cent of Sainsbury’s sales are now online, compared to 19 per cent a year ago, Mr Roberts said.

“Investments over recent years in digital and technology have laid the foundations for us to flex and adapt quickly as customers needed to shop differently.”

Staff will be informed about the details of the cuts today. Sainsbury’s highlighted that it had hired 52,000 people since March as sales have increased. Workers losing their jobs in Argos stores and on supermarket counters will be offered new roles but the supermarket chain warned that these may not all be in a suitable location or involve the right hours.

“Whilst we will aim to find alternative roles for as many colleagues as possible, around 3,500 of our colleagues could lose their roles as a result of our proposals. Including these proposals, we expect to increase our colleague population by 6,000 roles by the end of the financial year.”

Mr Roberts promised more price cuts on staple foods to help shoppers, particularly those whose incomes have fallen during the coronavirus pandemic.

Sainsbury’s has added its name to a long list of firms that have cut jobs since the pandemic began. John Lewis and Lloyds Banking Group announced 2,570 redundancies this week while Marks & Spencer reported its first loss in 94 years as a public company.

Sainsbury’s has accelerated plans to integrate the online and catalogue retailer into its supermarkets following a takeover in 2016.

“Under cover of Covid lockdown announcements Sainsbury’s are admitting that the 2016 £1.4bn Argos acquisition was a mistake,” said John Colley, associate dean of Warwick Business School.

“There was always a concern that Argos and Sainsbury’s appealed to very different customer segments with little overlap. That now seems to be true.”

Sainsbury’s other attempt at a large-scale acquisition, a planned tie-up with Asda, ended in failure after competition regulators blocked it last year.

Alongside the job cuts, Sainsbury’s announced retail sales (excluding fuel) rose 7.1 per cent in the 28 weeks to 19 September. Grocery sales jumped 8.2 per cent and general merchandise, which includes clothing and homeware, was up 8.2 per cent.

The company announced a loss before tax of £137m, reflecting £438m of one-off costs associated with Argos store closures and other strategic and market changes.

Supermarkets enjoyed bumper revenues during lockdown as cafes, restaurants, pubs and bars shut, and millions of people worked from home. Big retailers have also benefited from billions of pounds in business rates relief.

Sainsbury’s said it would pay out £232m in dividends.