An Inconvenient Convenience Store….

Speculation has been rife since mid-August that beleaguered supermarket chain Morrisons has been looking to offload some, if not all, of its M Local convenience stores. Yesterday saw the announcement that the supermarket giant is in talks to sell 140 M Local stores to Mike Greene, the retail veteran, with the backing of Greybull Capital for what, on the face of it, seems to be a relatively low price. The deal value is around £25m and, if it proceeds, will see Morrisons make a reported loss of £30m on the deal. So why do this deal? 

The “Big 4” UK supermarket chains have taken a battering in terms of their market share from the increased presence of Aldi and Lidl across the country and Morrisons has been no exception to this. Whilst the sector overall is showing marginal growth, Aldi and Lidl are consistently showing much stronger growth than Tesco, Asda, Sainsbury’s and Morrisons. 

Morrisons has a new management team, headed by former Tesco boss David Platt, and the sale of M Local would allow the retailer to focus back on its core business of supermarkets. The chain has a track record of doing deals that have tended to destabilise the retailer, as opposed to bringing increased shareholder value; remember the £4bn+ public takeover of Safeway in early 2004, which didn’t quite go as planned…? 

For Morrisons’ sake, this is one deal that needs to proceed and allow the company to go back to core and re-establish itself.

Filed under: retail, sale, supermarkets, UK, food