Supermarket chain Wm Morrison will close more than 10 per cent of the 1,164 McColl’s convenience stores it bought out of administration and convert most of the remainder to its “Morrisons Daily” brand.
The decision puts up to 1,300 people at risk of redundancy, although the group said it would offer alternative employment to all of them.
The UK’s fifth-largest grocer was a wholesale supplier to McColl’s and fought off competition from petrol station group EG to buy the business from administrators in May.
The stores have been run independently during an investigation by the Competition and Markets Authority, which ended last week with the UK’s competition regulator accepting Morrisons’ offer to sell 28 stores.
Morrisons said in a statement that the 132 stores to be closed “have been lossmaking for some time” and there was “no realistic prospect of achieving a break-even position in the medium term”.
Most will shut by the end of the year, although 55 that also contain a Post Office will be kept open until 2023.
The convenience store group’s interim chief executive Karen Bird and chief financial officer Giles David are also set to leave the business.
Joseph Sutton, convenience, online and wholesale director at Morrisons, said that while it regretted the closures they were “an important step towards the regeneration of the business”.
Most of the remaining stores will be converted to the Morrisons Daily format “within the next two to three years”.
McColl’s began rebranding its stores under the Morrisons name in 2019, on the basis that the supermarket’s brand was more familiar to shoppers than its own. Following a trial, it announced plans to rebrand 300 and around 286 stores had been converted by the time it went into administration.
On average, same-store sales have increased by a fifth following conversion. “Over the past three years, we have seen the significant enhancements that the conversion of a McColl’s store to a Morrisons Daily can achieve,” said David Potts, chief executive of Morrisons.
The addition of McColl’s — which as a standalone company had annual sales of £1.2bn — to Morrisons would “unlock significant synergies throughout the supply chain” that would lead to “significant investment in price” across both brands.
Morrisons has had a chequered history in convenience retail. It set up an “M Local” brand in 2013 under a previous chief executive, but Potts abandoned the venture in 2015 and sold the 140 stores that the company had opened to investment group Greybull Capital.
In 2018, Morrisons became the main supplier to McColl’s after its previous wholesaler, Palmer & Harvey, went into administration. Potts said at the time that this gave the company a capital-light route into an attractive sector.
Sales to McColl’s were previously treated as part of Morrisons’ wholesale revenue, which also included sales to petrol station groups such as Rontec and to Amazon.
McColl’s sales will now be consolidated within Morrisons’ retail revenue, boosting its flagging market share. Morrisons was recently displaced as the UK’s fourth-largest grocer by discounter Aldi.