Tesco will make 900 employees redundant as a result of closing six of its megastores and ceasing online sales in Poland, as the British retailing giant continues its departure from its largest market in central Europe.
In June, the retailer announced that it would sell 301 Polish stores, two distribution centres and its main offices to the Danish retailer Salling Group, which owns the Netto discount chain, for 819 million zloty (€185 million). Some 7,000 of Tesco’s former staff will work for the Danish chain, reports Puls Biznesu.
Some of Tesco’s other units had previously been sold off to other Polish firms, including Echo Investment, a developer – which took over Tesco’s big-box stores in Poznań, Łódź and Kraków in March – and German hypermarket chain Kaufland – which bought three of Tesco’s megastores in February.
At the time, the retailer announced that it would concentrate on its other Central European markets – Hungary, the Czech Republic and Slovakia – where it said it had a stronger position and better growth outlook, reports Onet.
While the company has not managed to sell off the remainder of its stores, it has nonetheless announced that it will continue the shutdown by closing six of its megastores: in Warsaw, Bielsko-Biała, Łódź, Opole, Gdynia and Ostrów Wielkopolski.
As a result of the closures, the company will lay off almost 900 staff, between 21 September and the end of the year. The company will also close its online store on 31 October.
Tesco entered Poland in 1995. At the peak of its presence, the chain had around 450 large stores, but it seemingly missed an opportunity by failing to respond to Polish retail’s evolution towards discount chains.
In recent years Poles have moved away from shopping at out-of-town megastores and small shops and towards smaller chains and discount stores, forcing Tesco to downsize stores and cut costs by making half of its staff redundant between 2015 and 2019.
After 2015, Tesco also increased its presence in the online shopping and home delivery market. But it has now withdrawn its delivery service from a number of cities, in part because online sales have not taken off in Poland as much as in many other countries.
Despite online sales picking up during the pandemic, at the start of the year home delivery was worth just 0.5% of the grocery retail market value, according to Gazeta Prawna. That compared with over 7% in the UK.
In 2017, Tesco also faced protests from workers unhappy with the chain’s salaries, which had been low even by Polish retail standards.
Moreover, Tesco’s bottom line has been hard hit by the Sunday trading ban, which was introduced in 2018 and expanded until reaching its full extent this year. The firm has pointed to this law as a major factor in its growing losses, with Dave Lewis, Tesco’s CEO, noting that “we have lost a number of trading days again in…what is [already] quite a challenging market”.
Main image credit: Patryk Ogorzalek/Agencja Gazeta