Morrisons makes last minute bid to save McColl's

Image source, McColl's

Morrisons has proposed a last-minute rescue deal for the convenience store chain, which is on the verge of collapse.

Last night, McColl warned that administration was more likely if it did not get more funding.

16,000 jobs could be saved at the retail chain with a deal with Morrisons.

Morrisons has more than 200 Morrisons Daily convenience stores which are operated by the same company.

The aim of the deal would be to save as many stores as possible.

It is thought that the improved offer includes taking on the debt and pension commitments of the company. Morrisons didn't say anything.

Morrisons has been talking to the people who are owed money for weeks.

The store needs an injection of funds to stay afloat.

Sky News reported that the potential rescue would involve the repayment of the lender's loans.

Morrisons and Martin's newsagents have a wholesale tie-up with McColl's, which has 1,400 stores.

It raised 30 million dollars from shareholders last year to expand its Morrisons Daily convenience stores, but at the time it warned that footfall had been hit by the coronaviruses.

People want to shop locally during the Pandemic and convenience stores are thriving.

Many of the problems were self inflicted.

It has been moving away from old fashioned newsagents into convenience stores with more fresh food and ready meals. Some of its stores are pretty boring.

It decided to change suppliers in order to get a deal with Morrisons.

After P&H collapsed, it switched to Morrisons, causing supply chain disruption. Those problems have been worsened by Covid. With profit margins being squeezed, it has become harder and harder for the company to make money.

The partnership with Morrisons to transform hundreds of existing stores into Morrisons Daily convenience stores has been a success. They have not been able to roll them out quickly enough. The business is running out of cash because of the large amount of debt it has.

Morrisons was the sole supplier of groceries for the convenience store chain when they signed a deal five years ago.

M Local, Morrisons previous venture into convenience stores, came to an end in 2015.

After selling its struggling M Local sites, it launched Morrisons Daily shops and started to change the name of its stores.

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 moved to buying locally in the coronaviruses crisis, but only a small proportion of the shops in the company had made the shift.

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

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