Hundreds of Jobs at Risk as Supermarket Blames Labor Policy

Morrisons is set to close 100 stores in a move that puts hundreds of retail jobs at risk, with the Bradford-based retailer targeting a tax on labor and wages agenda to put sites in decline.

Britain’s fifth largest supermarket said the stores, all of which are heritage stores from the 2022 rescue of the collapsed McColl’s chain, had been “challenged for several years” despite remedial measures. The closure will be phased in over the coming months, with affected staff being consulted.

In a rare statement, a spokesman for the group said the situation “has been made worse in recent years by significant cost increases resulting from Government policy choices, which have made it even more difficult to return these stores to profitability”. When management stops short of specifying specific methods, time leaves little room for ambiguity.

From 1 April, the National Living Wage increased by 50p to £12.71 an hour for those aged 21 and over, while the 18-to-20 rate rises by 85p to £10.85 and the student rate rises by 45p to £8. Topping it off was last year’s increase in employer National Insurance contributions, which raised the headline rate from 13.8 per cent to 15 per cent and reduced the second threshold from £9,100 to £5,000 – a double figure that has fallen sharply for traders who rely on part-time work.

The British Retail Consortium has warned that strike action added £5bn to the industry’s wage bill last year alone, and that up to 160,000 retail roles could be lost over the next three years as employers restructure their cost base. Morrisons’ announcement is the latest data point in those grim statistics.

McColl’s portfolio proved a constant thorn in the side of CEO Rami Baitiéh. Morrisons paid around £190m to take the chain out of administration in May 2022, and almost immediately moved to close 132 worst-performing sites while converting the rest to the Morrisons Daily fascia. The latest round of closings suggests that conversions alone have not been enough to fix unit economics in a tough retail environment.

It’s also the third major restructuring announcement from the grocer in recent months. Earlier this year, Morrisons confirmed the closure of 103 cafes, florists, pharmacies and Market Kitchens during a shake-up of store services, while last month staff were told the company was discussing the sale of 200 large offices at its Bradford headquarters as part of a rationalization of production.

Despite the closure, Morrisons has been at pains to stress that its convenience strategy is far from a setback. The group still operates around 1,700 stores and 497 supermarkets and employs around 95,000 people. It said it remained in the lead when it came to opening “hundreds more” of retail stores in the coming years, arguing that pruning the underperforming tail and tying in light franchises would leave its position “absolutely strong”.

For SME owners watching from the sidelines, the message is sobering. When a £20bn supermarket can’t make the numbers stack up in stores that carry its brand, smaller independents operating in smaller areas will feel the squeeze. The Ministry of Finance’s small pay rise, introduced in last year’s Budget, was billed as a pay rise for low earners; for many small employers, it has become a stress test for their operations.

The Ministry of Business and Commerce has been contacted for comment.