McColl's convenience store chain on brink of collapse

Image source, McColl's

Thousands of jobs are at risk as the convenience store chain is on the verge of collapse.

The retailer said that it would fall into administration if talks about a rescue deal weren't successful.

Sky News reported that the company could call in administrators on Friday.

More than 16,000 people are employed by the company.

The group would likely be placed into administration with the goal of achieving a sale of the group to a third-party purchaser and securing the interests of employees if there was no fresh funding in the short-term, according to the company.

The chain said on Thursday that discussions are still going on.

It wanted to create a stable platform for the business going forward.

The 1,400-store group has a wholesale tie-up with Morrisons, as well as Martin's newsagents, with a strategy centred around an image of a neighbourhood retailer.

According to its website, it serves five million customers a week.

The listed company warned that it would be suspending its shares because it couldn't meet the deadline for filing its annual results.

The accounts would not be signed off in time for the deadline.

Teresa Wickham, a former director at Safeway, told the Today programme that McColl had been caught in a difficult place.

She said that the firm was shifting its business model from convenience stores to selling more fresh produce in its partnership with Morrisons.

Stores that had done this had done well, Ms Wickham said, as shopping habits shifted to buying more locally in the coronaviruses crisis, but the chain had lacked investment, and only a small proportion of its stores had made the shift.

She said that they didn't have enough fresh produce and that they switched quickly to online shopping.

It will survive, but whether all of it will survive is a difficult thing to say.

Sky News reported that Morrisons had proposed a deal to the McColl's lenders which involved the supermarket injecting funding.

Morrisons refused to comment when contacted.

The expansion of its Morrisons Daily convenience stores was one of the reasons why the company raised 30 million pounds from shareholders last year.

The government accused it of failing to pay some of its workers the UK minimum wage.

The businesses had to pay back the money as well as be fined for various transgressions, such as failing to pay the correct apprenticeship rate, or deducting pay from wages for uniforms and expenses.