Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
According to The Grocer’s headline yesterday there is “Fury at plans to axe team leader roles” (March 30th) as Tesco (TSCO) are in discussions to remove an entire layer of in-store management. It looks a bold initiative. Yet it might be a straightforward call: if you have to choose, great store service requires action not oversight.
It is not risk free. Whatever shoppers do outside stores, once inside they expect the floors clean and clear, shelves stocked and tills staffed. Yet with sales being sliced between channels there simply isn’t the budget to do the number of hours based on existing cost structures. Something has to give.
Whilst Tesco are reportedly consulting with staff and USDAW, the main staff trades union, suppliers need to start thinking about how the changes might affect them. Any sign of reductions in in-store executional standards will lead to pressure for more supplier funded merchandising support, pushing further challenges across the entire value chain when price cuts are already looming.
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The omni-channel challenge looks increasingly ominous. Omni-ominous.
Date: 30 March 2014