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M&S to cut around 500 retail jobs in high street store closures

The retail sector is also struggling to cope with changing market conditions such as increases to the legal minimum wage

Marks & Spencer has stated that 6 stores will close by 2018, with a further 8 stores earmarked for closure later in the year, as part of its 5-year turnaround plan.

Marks & Spencer has confirmed that it will close 6 high-street stores located in Bournemouth, Birkenhead, Fforestfach (Swansea), Durham, Redditch and Putney (London), before the end of April this year. The move means the loss of about 500 jobs nationwide.

The retailer is also in consultation about the possible closure of 8 more stores located in Denton (near Manchester), Andover, Bridlington, Basildon, Falmouth, Stockport, Fareham, and Keighley. The downsizing would mean the loss of close to 500 more jobs.

Sacha Berendji, Director of Retail, has said that while stores were integral to the M&S customer experience, the chain needed to ensure that it offered well-located stores of the right type. In its press release, the retailer has sought to allay staff worries by saying that workers will be relocated to other outlets, where possible, though redundancies may need to be considered.

David Gill, from the Usdaw union, which represents shop and warehouse workers, has lamented the decision, saying that the closure of the stores would be ‘devastating’ for the affected staff, and criticised the group’s ‘salami slicing’ approach to re-organising the business.

The confirmed closures of the retail outlets follow related announcements that M&S is to close its Neasden distribution centre in north London, resulting in the loss of 380 jobs, as well as outsourcing its 430-person IT team to Tata Consultancy Services. In addition, the retailer has confirmed that it will only move forward with 36 new Simply Food outlets over the next six months, rather than the previously publicised figure of 200.

The downsizing is part of chief executive Steve Rowe’s five-year plan to turn the struggling high street retailer around, following a 5.3% fall in half-year profits in November 2017, disappointing trading during the Christmas period, and competition from high street rivals and online retailers.

The retailer hopes to reinvigorate its business model via a range of measures focused primarily on trimming its vast store network, which is responsible for the bulk of its £3.4 billion UK operating costs. The cost-cutting measures, through which M&S hopes to save £340 million, include closing up to 100 of its worst-performing stores, downsizing certain stores to be food-only outlets, and outsourcing administrative and distribution work.

M&S has defended its decision to proceed with the large-scale shakeup of its retail operations on the basis that the changes are ‘vital’ if it hopes to stay competitive in increasingly challenging market conditions.

Other high street retailers, such as Tesco, Sainsbury’s, Debenham’s and House of Fraser, have also disclosed plans to downsize their operations as more and more people choose to shop online. The retail sector is also struggling to cope with changing market conditions such as increases to the legal minimum wage, higher business rates and steadily rising inflation since the Brexit vote.

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