Morrisons sent out information packs on 120 of Safeway’s 138 small stores this week, said a spokesman.
He said: “We didn’t build a case for driving sales densities through the smaller stores. They were never key to the deal.”
This came as no surprise to the City, given Morrisons had no experience of trading from stores under 15,000 sq ft.
However, some analysts questioned the wisdom of selling off stores so soon, as negotiations with suppliers were currently focused on the extra volume Morrisons could command with Safeway in tow.
One analyst said: “Morrisons is already selling off more larger stores than the 52 disposal stores, and now it is talking about giving away another million square feet. What message does that send out?”
Potential buyers such as Waitrose would probably only be interested in a handful of larger stores in the 10-15,000 sq ft range, he added, while Tesco and Sainsbury would probably be most interested in those small enough for their c-stores.
The Co-operative Group and Somerfield probably stand to gain the most from the sell-off, as they would not face regulatory issues and were more likely to be interested in stores in the ‘no-man’s land’ of 5-12,000 sq ft, said analysts.
Separately, Morrisons has confirmed plans to take over Safeway’s ‘The Best’ and ‘Eat Smart’ own label brands. The former will be used for a new premium range, while the latter will replace Morrison’s ‘Better for You’ sub brand.