Morrisons Daily McColls Stretford Road 2

Morrisons is set to convert the “substantial majority” of its McColl’s convenience estate to its Morrisons Daily format within the next two to three years.

The supermarket giant today took full control of the McColl’s business, which it bought out of administration in May, having received clearance from the Competition & Markets Authority last week.

Morrisons also confirmed it would permanently close 132 McColl’s stores it said had been loss-making for some time with “no realistic prospect of achieving a breakeven position in the medium term”. It said the majority of these stores would be closed “in an orderly fashion over the remainder of the year”. 

Of these sites, 55 feature a Post Office. Morrisons said it would delay closing them until next year so they can continue to serve their communities over Christmas. The retailer said it was working with the Post Office to see if the counters could be relocated to nearby McColl’s or Morrisons stores.

The closures put 1,300 staff at risk of redundancy, but Morrisons said every affected colleague would be offered alternative employment at a nearby McColl’s store, Morrisons store or within its logistics and manufacturing operations. It said no further closures were currently being considered but admitted it remained “in discussions with a number of landlords of challenged stores”.

Before McColl’s, which has an annual turnover of around £1.2bn from 1,164 stores, collapsed into administration, it had 286 sites trading under the Morrisons Daily fascia, with plans to grow this to 450 by this month. Morrisons said that the conversion process, along with other franchise partners, would take the number of stores trading under the Daily format to over 1,000 within two years.

The retailer acknowledged that McColl’s has suffered from a lack of investment for some time in terms of both store estate and supply chain. It has pledged to “invest significantly in the business over the next year “as well as leveraging our scale, expertise and our own food-making operations to improve and simplify every aspect of the McColl’s business”. As well as promising an enhanced product range and improved shopping environment, Morrisons said that by unlocking “significant synergies throughout the supply chain in buying, logistics and goods not for resale” it could invest in price for both the Morrisons Daily and McColl’s fascia stores to make them more competitive.

In terms of management, Joseph Sutton, Morrisons convenience, online and wholesale director, will take on direct responsibility for McColl’s. McColl’s interim CEO Karen Bird and CFO Giles David are set to leave the business following a short handover period.

“Today marks an important moment for the McColl’s business, colleagues and customers as we formally welcome the business and its colleagues into the Morrisons family,” said Morrisons CEO David Potts. “We are now able to begin the urgent journey to transform McColl’s into a viable, well-invested and growing operation.

“Over the last three years we have seen the significant enhancements that the conversion of a McColl’s store to a Morrisons Daily can achieve, and so I am very pleased that we will now have over 1,000 Morrisons Daily stores trading within two years. I’m confident that the McColl’s conversions, combined with the increased competitiveness that will be unlocked through investment and synergies, will make Morrisons a growing force in the important convenience market in the years to come.”

Sutton added: “We have a great deal of work to do but there’s no question that McColl’s is a business with strong potential. I’m confident that the combination of McColl’s conveniently located stores and great colleagues together with Morrisons’ scale, brand, systems and fresh food expertise will lead to a transformation of the business.

“We very much regret the proposed closure of 132 loss-making stores but it is, very sadly, an important step towards the regeneration of the business. I am confident that McColl’s can, in the Morrisons family, once again become a growing, thriving and vibrant convenience business serving local communities across the UK.

“We are pleased to be able to offer every colleague alternative employment within the Morrisons group, but we fully recognise that this might not be a practical solution for all colleagues.”