M&S announces 7,000 job losses across stores and management

Marks & Spencer (M&S) has announced it will be cutting 7,000 jobs across its business over the next three months at both store and management level.

The retailer said the streamlining strategy reflects the shift to online shopping during the Covid-19 pandemic as well as the introduction of in-store technology due to its partnership with Microsoft, which has “enabled us to reduce layers of management and overheads in the support office”.

M&S will begin the consultation process with affected staff from today, and added it expects a “significant proportion” of departures to be through voluntary redundancies and early retirement.

Through its digital transformation plan outlined in recent months, including investment in online fulfilment and its new ambient food warehouse, the grocer said it expects to create new roles over the course of the year.

In the trading update, M&S also revealed that online clothing and home sales grew 39.2% in the last eight weeks, representing 41% of all sales in this category, reflecting the continued consumer shift to eCommerce. And in-store sales in this category fell 47.9% in this period, despite the reopening of its shops in June.

Steve Rowe, chief executive at M&S commented: “In May we outlined our plans to learn from the crisis, accelerate our transformation and deliver a stronger, more agile business in a world in which some customer habits were changed forever. Three months on and our Never the Same Again programme is progressing; albeit the outlook is uncertain and we remain cautious.

“As part of our Never the Same Again programme to embed the positive changes in ways of working through the crisis, we are today announcing proposals to further streamline store operations and management structures. These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs and we are committed to supporting colleagues through this time.”

Commenting on the announcement, Richard Lim, CEO, Retail Economics said: “This is a massive reduction in their workforce and the retailer is desperately attempting to reposition the business towards a new normal emerging in the sector. This painful readjustment period will see a significant reduction in labour costs, cutting back on store numbers and pivoting the business model to become nimbler and more digitally focused.

"Retailers were already battling with the pace of structural change facing the sector but the impact of the pandemic has been a step-change for the industry. Retailers remain in survival mode, preserving cash and hanging on for more sustainable levels of demand to return. But the way we shop has changed on a permanent basis for many parts of the sector almost overnight. The reality is that many more retailers will fail and the number of job losses will ramp up as government support is withdrawn. This is the calm before the storm."