Tesco to cut 4,500 jobs in Metro restructuring

By Kate Holton

LONDON (Reuters) - British supermarket chain Tesco is cutting about 4,500 jobs from its Metro stores to improve the efficiency of a format that is increasingly used by customers daily rather than for a traditional weekly shop.

Tesco, both the biggest retailer and largest private sector employer in Britain, is restructuring operations in response to changing consumer habits, driven by the rise of online shopping and increased competition from discounters Aldi and Lidl.

The company said the changes in its 153 Metro stores - medium-sized shops found on Britain's shopping street and by railway stations - would allow it to shift stock more quickly to the shelves and cut the time it was held in the store room.

Metro stores had originally been intended for customers making a weekly shop, but Tesco said the dynamic had changed and customers are increasingly buying food daily.

Where many staff had developed specialisms, such as selling wine, they now need to be able to work across all disciplines, the company said.

Tesco, which had a 27.2% share in the latest data from sector researcher Kantar, has largely outperformed main rivals - Sainsbury's, Asda and Morrisons over the past year.

However, the whole industry has remained under pressure from German challengers Aldi and Lidl, prompting Tesco to review logistics in an effort to find efficiency savings and maximise profit growth.

"In a challenging, evolving retail environment, with increasing cost pressures, we have to continue to review the way we run our stores to ensure we reflect the way our customers are shopping and do so in the most efficient way," said Tesco UK boss Jason Tarry.

SECTOR TURMOIL

Tesco is testing a discount format of its own. The new stores, named "Jack's" after the group's founder, sell a limited range of products at low prices.

The Metro job cuts, however, are another blow to a sector that has been hammered in recent years by the rapid growth of online shopping and a sluggish economy, forcing many brands to axe stores or go out of business altogether.

The British Retail Consortium says that the "profound transformation" of the sector led to about 72,000 job losses in the past year.

Tesco also said it would reduce opening hours in 134 of its 1,750 Express convenience stores and streamline stock-handling procedures in some of its larger stores.

Employing about 320,000 people in Britain, Tesco cut thousands of jobs earlier this year when it removed fresh meat, fish and delicatessen counters from its bigger stores.

Shopworkers' union Usdaw, which said it represented more than 160,000 Tesco staff, vowed to do what it could to protect jobs and find affected staff alternative roles.

"Our members at Tesco are shocked and dismayed by yet another round of potential job losses, coming just months after 9,000 staff were put at risk in stores," said National Officer Pauline Foulkes.

"We will be working hard to make sure that any members potentially affected by these proposals are supported at this difficult time and throughout the consultation period."

(Reporting by Kate Holton; Editing by Paul Sandle and David Goodman)