McColl’s Call for Assistance: Convenience store chain rescued by Morrisons

May 15, 2022

2 min read

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What's going on here?

After recently being put into administration, the convenience store chain McColl’s has been sold to supermarket group Morrisons.

What does this mean?

After McColl’s announcement that it was on the brink of collapse, the news that Morrisons is rescuing the chain will make McColl’s 16,000 staff heave a sigh of relief. Morrisons will take on McColl’s 1,160 shops and pension schemes, as well as paying off its £170 million debts. Prior to this deal, there were concerns that if McColl’s went into administration and was unable to find a buyer, there would be store closures and job losses across the UK.

What's the big picture effect?

McColl’s has struggled since the outbreak of Covid-19, closing 179 stores in 2020 alone. The company faced pandemic-related supply chain issues and struggled to update its food range. McColl’s is not alone with many retail businesses feeling the strain of the pandemic and changing customer habits. The most notable collapses during the pandemic were Debenhams and the Arcadia Group, which collectively had a workforce of roughly 25,000 people.

Therefore, the deal with Morrisons is a positive outcome for McColl’s staff who have understandably been concerned by the chain’s announcement that it was close to collapse. However, Morrisons was not the only company interested in coming to McColl’s rescue. The EG Group, owned by the new co-owners of Asda, also filed a final offer for McColl’s. In order to pip EG Group to the post in the bidding war, Morrisons had to match EG Group’s offer to take on the vast majority of McColl’s stores and staff, as well as paying off its debts in full immediately. Morrisons will also have to honour all of McColl’s outstanding pension obligations.

As Morrisons supplies stock for the convenience stores, this existing relationship is likely to have helped the supermarket giant to seal the deal. The plan is to convert hundreds of McColl’s stores to Morrisons Daily convenience stores. Although these stores have been successful for Morrisons, it will face a number of challenges to work out what went so wrong for McColl’s and how to prevent something similar from happening again.

Report written by Imogen Wilson

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