Restructuring: Marks & Spencer To Let Go 7,000 Employees
Retailing is undeniably one of the most hard-hit industries by the pandemic. Europe’s retail giants are no exemption.
Shares in Marks and Spencer fell by almost 4% in morning stock trading, followed by the announcement of 7,000 job cuts. Stocks slid further by 2.5% after the report.
In the next three months, M&S’s job shedding will add to the UK’s booming unemployment data. The majority of these come from central support centers, regional management, and retail stores.
The massive change in the UK population’s spending habits poses problems for retailers. Now that most transactions are online, more jobs formerly needing manning and supervising by an employee are not required anymore.
The movement from traditional shop floor jobs to warehouse and logistics jobs that will support growing online offerings is also a contributing factor.
In the last few weeks, online sales from the e-commerce revolution presented 41% of Marks & Spencer’s total sales in clothing and home.
Lockdowns helped people realize the convenience of online shopping, which eliminates gas fees, time consumption, and the risk of getting the virus when a consumer goes out to shop in a physical store.
Pre-pandemic M&S Performance
Even before the pandemic, Marks and Spencer recorded significant losses in its clothing and homeware ventures.
Its failure to secure a position in the e-commerce market, with the conservative image of its clothes, resulted in the stall. Adding to this is the stiff competition in the market plagued by startups.
The pandemic only worsened the already dire situation. In May, it recorded a £500 million worth of unsold spring and summer collection.
Last month, M&S stocks plunged after recording an 84% year-on-year plunge in clothing sales. This resulted in the axing of 950 employees.
The job cuts will add to the problematic numbers of job losses from Britain’s biggest retailers, namely Boots, John Lewis, and WH Smith.
According to the British retail chain’s CEO, business reconstruction is imperative in delivering to changing customer needs.
The company is willing to give just compensation to employees who will be losing their jobs. A significant proportion of cuts will come from voluntary exits and early retirement.
In recent months, M&S continues to record sluggish performance in the stock market. Sales are down by 19.2% from the same period last year. Clothing and home sales fell by 49.1%, while food sales had a modest shrink of 1.1% in the 19 weeks running up to the August 20 period.
Lately, the department store giant emerged slightly higher, with food sales breaking the red to 2.5% sales growth.
Britain’s grocery spending climbs down again by 10% from last month’s records. However, in-store grocery sales recorded a 0.3% growth while online grocery shopping skyrocketed by 117%.
The retailer announced a partnership with Ocado’s grocery delivery platform to get serious with its online food delivery venture.
However, Ocado itself is struggling to breakeven causing the firm to operate only at capacity. The binding may likely just disappoint customers ordering M&D products online.
This, in turn, could have a further detrimental effect on the firm’s stock market position. Its stock price is already 55% down from its 2015 rate.
