Morrisons is to offload its smaller convenience stores, following a succession of talks with private equity firms.
It is understood that the big four grocer is in advanced discussions with Greybull Capital is looking to acquire Morrisons’ set of convenience stores, which trade under the name M Local.
Sources close to the deal said it could be confirmed within just a few short weeks.
The M Local estate equates to around 150 and 160 stores, which generate between £250m and £350m in sales, sources said.
In February, Richard Hyman, a retail consultant said that online accounts for around 6% of the grocery market, whereas convenience is much bigger. “Online is a sexy topic that everyone wants to talk about, it is presented as the greatest disrupter we have ever seen in retail. But the convenience store and its growth has been a bigger disrupter,” Hyman insisted, adding that it’s “enormous.”
In lieu of opening convenience stores much later than Tesco, Sainsbury’s and Asda, Morrisons increased its estate at a much faster rate (100 a year), but unfortunately for the UK’s fourth largest supermarket chain, this backfired.
In March, Morrisons announced plans to close 23 of its M Local convenience stores, swinging the axe on 300 jobs after Chairman Andy Higginson said that over 30% of convenience stores hadn’t worked out according to plan.
The retailer will concentrate on larger supermarkets as it attempts to turnaround the business under the leadership of new CEO David Potts, and try again with convenience later.
The relaunch could be in the form of a joint venture or acquisition.