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Personnel Today

Supermarket sweep

by Nic Paton 5 Jul 2005
by Nic Paton 5 Jul 2005

Nic Paton profiles top supermarkets Tesco, Asda and Sainsbury’s, and looks at their HR strategies and what they have planned for the future

The UK supermarket and grocery market is worth an estimated £5.7bn, of which, according to researcher Verdict, Tesco accounts for more than half – an astonishing £3.1bn of sales.

The dominance of Tesco has been the primary story of the sector for the past decade, ever since it first overtook Sainsbury’s in 1995.

As the first UK company to report profits of more than £2bn, the first (and so far only) UK supermarket chain to become a truly global player and increasingly dominant in non-traditional grocery areas – such as convenience stores, clothing and non-food – Tesco has been a success story without parallel.

With an enviable track record when it comes to HR and leadership development, it is arguably Tesco’s investment in its people – its ‘Every Little Helps’ slogan sums up the sort of mentality it is trying to engender in its staff – as much as its ethos of ‘pile ’em high, sell ’em cheap’ that has been behind much of its growth in the past few years.

“What really helped Tesco get off the ground in the 1990s was that it recognised that its staff were not as well trained as those at Sainsbury’s,” says Andrea Cockram, an analyst at Verdict. “It put a lot of effort into that, and it has paid off.”

Perhaps the biggest HR story of the past couple of years, however, has been Morrisons’ swoop on Safeway in March 2004, which consolidated the sector into four key players.

Back in 2002, Morrisons did not even get a mention in Personnel Today’s profile of the sector. At the time, the Bradford-based chain, led by veteran retailer Sir Ken Morrison (son of founder William), although highly respected in retailing circles, was for the most part a northern supermarket chain. That all changed in 2003, when the company pounced on the ailing Safeway, which was four times its size. Finally completing the tortuous 14-month, £2.9bn deal in March last year, it catapulted Morrisons into fourth place in the sector, and it now has 435 stores and employs 150,000 staff.

But if it was designed to be a glorious finale in the career of 74-year-old Morrison, it has proved sorely misguided. A string of five profit warnings followed – with latest forecasts down as low as £50m, from £320m last year.

One of the criticisms of Morrisons since the integration began has been a lack of information given to the City about what is going on. This shyness also extends to the chain’s media relations, it appears, with Personnel Today’s request for an interview with HR director Mike Greenwood being declined – we had hoped to run a page profiling the supermarket.

As the former Safeway HR director, Rebecca Ivers, revealed in Personnel Today last year, people were “scared because it happened out of the blue”, rumours were flying around of stores closing and jobs being cut, and everyone was in limbo for 18 months. At the very least, such uncertainty, fear and tension required the sort of sensitive touch that unfortunately appears not to have been forthcoming from Morrison and his team.

What is clear is that 2005 is set to be a crunch year for the supermarket sector, argues Verdict. Morrisons may be languishing at the moment, but if or when it pulls things around, it is likely to change the whole complexion of the sector. Of course, Morrisons may yet defy the doomsayers and come out the other end, ready to take on Asda, Sainsbury’s and Tesco.

At the company’s last results, Morrison, in a masterly moment of understatement, conceded the past year had been “exacting” for staff. Next year, he added, would be just as hard. For Greenwood and his HR team, too, no doubt.

In such a competitive industry, where every customer lost or gained counts, supermarkets have long recognised the value of giving HR a high profile. They all spend vast amounts of time and effort on coaching, leadership, talent management, retention and reward strategies.

Retail is an area where HR, successfully at Tesco and less so at Morrisons, is in the spotlight, like few others.

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Nic Paton

Nic Paton is consultant editor at Personnel Today. One of the country's foremost workplace health journalists, Nic has written for Personnel Today and Occupational Health & Wellbeing since 2001, and edited the magazine from 2018.

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