Sainsbury's to slash 2,000 jobs across the UK amid escalating price war

British supermarket Sainsbury's has unveiled plans to cut approximately 2,000 jobs across the UK amid an escalating price war against discount chains Aldi and Lidl.

The FTSE 100-listed company said the move, which was announced late on Tuesday (17 October), will save approximately £500m (€560m) and will affect both stores and back office positions.

Some 600 back office jobs, which serve Argos and Sainsbury's bank along with the supermarket's stores, will be axed alongside 1,400 in-store clerks.

"The UK grocery market is changing at a rapid pace and it's crucial that we transform the way we operate to meet future challenges and continue to provide customers with best in class service," said a Sainsbury's spokesman.

In March, the retailer slashed 400 jobs following a review of its store operations. As part of the shakeup, Sainsbury's also cut night shifts in 140 stores, which affected 4,000 employees, who were required to move either to early morning or late evening shifts.

Sainsbury's had set out a three-year plan aimed at saving around £500m by March 2018 but group chief executive Mike Coupe has revealed the retailer will implement a similar programme over the next three years, as it strives to save the same amount.

The move to a centralised HR model is crucial to the company's cost-saving plan, which means tasks like processing payroll will no longer be done in store. According to The Times, that is the main motivating factor behind the decision to slash 600 office jobs, which are based in Manchester, Coventry, Edinburgh and London.

"Following a comprehensive review, we are proposing some updates to our HR structures and systems, as well as changes to a number of other support roles," the supermarket added.

"This has been a difficult decision and we appreciate that this will be a tough time for those colleagues affected by the changes."

Sainsbury's is not alone in choosing to implement drastic job cuts. Tesco, the UK's biggest retailer, is in the process of culling 2,300 positions as part of a cost-cutting drive which will reduce the number of its head office staff, while the company's call centre in Cardiff will close in 2018.

Meanwhile, over 3,000 Asda workers across 18 stores are also facing redundancy, as Britain's third largest supermarket chain looks to cut costs.

Alongside Morrisons, which completes the so-called "Big Four" of British supermarket chains, the trio are suffering the effect of the ongoing price war against Aldi and Lidl. According to figures released by Kantar Worldpanel, the German discount chains added £390m to their sales over the last three months, bringing their combined market share to 12%.

Each 1.0% of market share represents approximately £1.2bn in annual revenue.

However, as far the "Big Four" are concerned, the situation could get even gloomier. Ratings agency Moody's expects the combined market share of the two German chains to rise to 15% over the next three years.

"We believe most of the ongoing revenue gains by the discounters will come at the expense of the 'Big Four,'" said David Beadle at Moody's.

"The only uncertainties are the extent to which inflation and population growth soften the blow of this hit to revenue, and how the loss of market share will be spread out."