You have to feel for the staff at McColl’s. Since Morrisons bought the embattled convenience chain out of administration for £190m, they have faced six months of uncertainty – having already suffered months of anxiety as to whether the business had any future at all.

Yesterday we finally got some answers. Morrisons got its hands on the business after the Competition & Markets Authority accepted its proposals to sell off 28 stores to alleviate competition concerns.

First, the bad news: Morrisons has confirmed the closure of 132 stores. Although this number is less than many industry watchers predicted, it is still a blow – and perhaps an inevitable one, given Morrisons acknowledged the stores were loss-making and a long way from breaking even. This puts 1,300 jobs at risk and we can only hope Morrisons can find roles for as many of these affected staff as possible in other McColl’s and Morrisons stores, or its logistics and manufacturing arms.

Now, the better news: Morrisons sees a future for the bulk of the 1,164 remaining stores and plans to convert the “substantial majority” to its Morrisons Daily format. Before the chain collapsed in May, 286 stores were trading as Morrisons Daily, and there was a plan to increase this number to 450 by this month. The conversion process is now set to get back up and running in earnest. Morrisons hopes to complete it within three years, and expects the number of stores to exceed 1,000 within two years.

We already knew the format worked – the stores that had previously been converted typically saw a like-for-like sales improvement of 20%, way ahead of the performance of standard McColl’s stores. But equally, there was an interesting and informative line in yesterday’s statement from Morrisons, in which it noted McColl’s had suffered from a lack of investment for some time in terms of both stores and supply chain. So although the supermarket giant has clearly already spent a lot of money in securing the McColl’s business, which is central to its wider wholesale ambitions, considerable further investment will be needed.

As well as promising an enhanced product range and improved shopping environment, Morrisons pledged to unlock “significant synergies throughout the supply chain in buying, logistics and goods not for resale” to invest in making prices more competitive at both Morrisons Daily and McColl’s fascia stores.

You sense the first key investment will have to be in improving the store estate and supply chain. Availability has been an issue ever since Morrisons began supplying the chain in 2018, and even many of the existing conversions retain the chain’s old fixtures and fittings. Therefore, making prices more competitive may well be a bit further down the line. Either way, we are a long way from the capital-light supply agreement Morrisons was so pleased with at the time.

That is now by the by, of course. Morrisons will be glad to have secured the deal, and that will also provide stability for the stores it is keeping. But there is clearly plenty of hard work ahead to maximise what still remains a great opportunity to become a really serious convenience player. 

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