McColl’s extends Morrisons supply deal

Morrisons is now the single wholesale supplier across the entire McColl’s estate. Previously around 300 stores that McColl’s acquired from the Co-op in 2017, were under a separate supply contract with Nisa, which ended at the end of last year.

In addition, the supermarket will support on the conversion of 300 McColl’s convenience stores to the Morrisons Daily fascia and format – selling Morrisons own-brand products – over the next three years. The conversion includes the existing 31 Morrisons Daily stores currently in operation.

McColl’s says its 31 existing Morrisons Daily stores have “consistently delivered positive like-for-like sales performance, driven by their higher mix of grocery sales, breadth of offer and value proposition”.

Jonathan Miller, chief executive of McColl’s, said: “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.

“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.”

David Potts, chief executive of Morrisons, added: “Today’s agreement is another example of Morrisons extending the reach of our popular brand. In doing so, we are building a broader, stronger Morrisons for customers, and leveraging our existing assets to achieve capital-light, profitable growth.”

Meanwhile, McColl’s says “strong demand” for its offering resulted in a 7.9% increase in like-for-like sales in the 12 weeks to 21 February 2021, while a shift in the pattern of trade away from higher-margin impulse categories continues to generate lower gross margins overall.

The retailer expects the “sales mix to normalise” as lockdown restrictions ease through the course of the year.