Tesco is trialling shorter opening hours at some of its Express convenience stores, closing them at 10pm instead of 11pm, as Britain's biggest supermarket grapples with a £235 million increase in staff costs following changes to National Insurance contributions.
The retailer is testing the reduced hours at a small number of less profitable stores, which have been dubbed "Express Lite" shops internally. These stores are also expected to operate with fewer staff during opening hours.
Workers have been informed that the trial is taking place in some of Tesco's less profitable locations as the company seeks to offset mounting cost pressures. A spokesman said the changes were designed to "make things simpler for our colleagues and to ensure that we are running these shops in the most efficient way".
The move follows warnings from Ken Murphy, Tesco's chief executive officer, that the supermarket was racing to counter a wave of extra costs after Chancellor Rachel Reeves's tax changes took effect in April. The grocer is facing a steep rise in its staffing bill, including the £235m increase in National Insurance contributions.
Under the changes introduced in spring, employers now pay a tax equivalent to 15 per cent of their workers' pay packets, up from 13.8 per cent previously. The threshold at which the tax applies has also fallen from earnings of £9,100 a year to £5,000.
Combined with a 6.7 per cent rise in the minimum wage in April, retailers are facing £7bn of extra costs following the Budget, according to the British Retail Consortium.
Murphy said in April that Tesco would strip out about £500m of costs in the coming financial year to offset the Budget impact. He urged Reeves to avoid increasing retailers' costs further, saying: "All we're saying as an industry is, don't make it too hard for us to keep delivering great value."
Union leaders have voiced concerns over the changes to Express Lite stores. Daniel Adams, Usdaw national officer, said the union "has not agreed this change and we will be monitoring the trials closely to assess the impact on our members".
He added: "The union has repeatedly raised issues with the business around the risks of low staffing and retain significant concerns around how this trial will work. While we have been assured by the company that they do not anticipate any redundancies from this process, we are aware it may involve staff transferring to other stores. That in itself can cause problems with travel, caring commitments and shift patterns."
Tesco is understood to be speaking to affected staff and considering individual circumstances for those who may need to transfer to another store. A spokesman said: "These changes aren't visible to our customers, who will continue to receive the same great service they expect, and there are no changes to the range of products we sell."
Other businesses are also reducing hours to counter increased staff costs, with pubs reportedly closing at 9pm rather than 11pm.
The efficiency measures come as Tesco faces mounting pressure from rival Asda, which has launched a price war this year. Last week, Allan Leighton, Asda's chairman, claimed the supermarket had opened up a price gap with Tesco and would continue cutting prices on some items whilst raising prices of other goods more slowly.
Tesco warned in April that its profits could fall as much as 14 per cent this year as it prepares to invest £400 million in price cuts.
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