Morrisons plans 300 more convenience stores as part of McColl deal

UK supermarket Morrisons is boosting the number of its convenience store format to around 300 stores as part of its extended supply deal with convenience store McColls.

The new deal, which extends the existing wholesale partnership until 2027, will acceleration the conversion of McColls stores to the new Morrison Daily format over the next three years. So far 31 stores have moved to the new fascia, with 300 planned by 2024.

This comes of the back of positive like-for-likes at the current Morrisons Daily stores, which performed strongest during the pandemic, the company said. Performance was driven by a high mix of grocery sales, the breadth of the offer and value proposition.

Morrisons will also supply the rest of McColl’s estates of 1,200 stores with its own label Safeway brand until 2027. This extends the initial deal, signed in 2017, by three years and makes it the company’s only wholesale supplier. Morrisons has also extended a bank facility for McColls until February 2024.

McColls chief executive  Jonathan Miller said the “milestone” extension would ensure the continued supply of a supermarket-quality offer across its entire estate and would allow it to execute a strategy to deliver sustainable profitable growth.

“In Morrisons we retain a long-term partner with best-in-class sourcing and manufacturing capabilities and a leading convenience offer for the local neighbourhood communities we serve across the country,” he said.

“Despite the challenges presented by COVID-19, the new partnership represents another significant step forward in achieving our strategic goal of increasing our fresh food offering in our store estate, while offering the best value for money for our customers. We are well positioned to continue enhancing our convenience offer and improving the quality of our estate at a time when the importance of neighbourhood stores has never been greater.”

The deal in 2017 came after a three month supply trial between McColls and Co-op in which the convenience store supplied wine, fresh and ambient grocery to 25 McColl stores. At the time, Morrisons chief executive David Potts said the wholesale supply would make the supermarket a “broader, stronger business”, adding that it was a way to access the UK’s growing convenience food market “in a capital light way”. The retailer also has a wholesale supply deal with online giant Amazon. 

Following the end of the trial, The Coop went on to sign a deal with Nisa.