Morrisons currently holds an 8.4% share of the UK grocery market
Thousands of shoppers are facing the prospect of losing their local convenience store after Morrisons announced its intention to close 100 loss-making outlets, citing what it described as a crippling surge in costs driven by Government policy.
The supermarket giant said the closures put hundreds of jobs at risk and represent the latest phase of an extensive cost-cutting programme that has already seen cafés, pharmacies, meat counters and florists removed from its estate. Senior executives said the stores earmarked for closure had been operating at a loss for years, but cautioned that spiralling staff costs and new bureaucratic burdens had worsened the situation considerably.
Morrisons chief executive Rami Baitiéh has previously warned that the supermarket sector has been struck by an ‘avalanche of costs’, with retailers struggling under the weight of higher National Insurance contributions, increases to the minimum wage and new packaging recycling levies.
The Bradford-based grocer said: “This situation has been exacerbated in more recent years by significant cost increases resulting from government policy choices, which have made returning these stores to profitability even more difficult.”
The announcement marks a further blow for Morrisons as it grapples with fierce competition from cut-price rivals such as Aldi, which has surpassed it in the race for British grocery shoppers.
Morrisons currently holds an 8.4% share of the UK grocery market and has dropped out of the traditional ‘Big Four’ supermarkets. The closures arrive despite Morrisons having pursued an expansion into convenience retail in recent years, as consumer habits have moved away from one large weekly supermarket shop towards smaller, more regular purchases.
The group currently runs approximately 1,700 Morrisons Daily convenience outlets, including roughly 700 franchise locations, and stated that future growth would concentrate on franchise sites rather than company-operated shops. Morrisons acquired more than 1,100 McColl’s outlets from administration in a £190million rescue agreement in 2022 and transformed many into Morrisons Daily branches.
However, analysts suggest the chain has been weighed down by debt since its £10billion acquisition by private equity firm Clayton Dubilier & Rice.
The supermarket has devoted recent years to offloading portions of its extensive property portfolio through sale-and-leaseback arrangements to help reduce borrowings.
Net debt has dropped 46% from its 2022 peak to £3.2billion, while annual losses decreased by £33million to £318million in the year to October.
Nevertheless, Morrisons still incurred £281million in interest charges last year alone. The chain confirmed it would commence consultations with affected employees and unions and would attempt to redeploy workers into neighbouring stores and warehouses wherever feasible.
