UK supermarket chain Morrisons’ plans to supply McColl’s convenience stores and newsagents signal a firm commitment to move back into the convenience market, says GlobalData Senior Analyst Molly Johnson-Jones.
Morrison’s MLocal stores were sold in 2015 following a failed effort to participate in the growing convenience market. Ms Johnson-Jones says this clearly has not put the retailer off.
“The convenience market is the fastest growing segment of the UK food-retail market and, given the lack of growth opportunities elsewhere, we see the convenience market as an essential segment to be competitive in,” she said.
“Sainsbury’s recent growth has been largely down to its convenience stores and Tesco is making the move with Booker, further showing that the independent convenience sector is desirable. With Tesco and Sainsbury’s experiencing the benefits of being convenience players, it makes sense for Morrisons to be reviving the Safeway brand with a view to supply independents.
“After a successful trial with EuroGarages was revealed in the company’s preliminary results in May, Morrisons’ potential to create a side brand with Safeway could provide further growth in a highly competitive and cost-pressured sector. If the collaboration goes ahead, and the Safeway brand grows in scale, it would be a huge positive for Morrisons after having lost 1.2 percentage points from its UK food and grocery market share over the past five years.”
According to Ms Johnson-Jones, the venture would give Morrisons access to the high-growth food-on-the-go market, of which it doesn’t have the geographical scope to take advantage.
“In addition, it’s a high-return, low-investment opportunity which would improve brand visibility and allow further geographical reach without the cost of running stores. All in all, we see it as a positive move if it goes ahead.”