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Tesco - Delayering and the purchase of Paperchase

Geoff Riley

1st February 2023

Two interesting stories about Tesco - a business that many students and teachers follow for case-study gold dust!

Delayering: Tesco aims to reduce the number of store managers

You could make this quite a complex bit of economics, highlighting how Tesco is looking to cut costs in the present environment by replacing store leaders with shift leaders and reducing their pay.

It's a classic of the genre - delayering - and then getting other staff to take on the role for less than the present incumbents were paid to do it. Have a good think about whether this is going to reduce the supermarket's fixed or variable costs in the longer term.

More here: Tesco: More than 2,000 jobs set to go due to store changes

What is delayering?

Delayering refers to the process of reducing the number of management layers or levels in an organizational hierarchy. This restructuring aims to streamline decision-making, increase communication and collaboration, and make the organization more nimble and responsive to change. Delayering can result in a flatter, less hierarchical organizational structure.

Business Growth - Tesco Buys Paperchase

The stationery chain Paperchase has entered administration with all jobs likely to be lost as Tesco buys the brand and intellectual property rights but not the retail stores. Paperchase was always vulnerable to an economic downturn when people are cutting back on non-essentials. I enjoyed shopping there, but they suffered from an overly quick expansion - at high rents – in locations that were often not optimal to attract high footfall.

More here: Paperchase: Tesco buys stationery brand but not its shops

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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