Details are obviously sparse at this stage, but logically, at breakeven on sales of say £300m, it is probable that the 160-outlet chain will change hands for no more than £250m - a financial relief for Morrisons, and an exciting convenience-challenge for the new owners.
The issue for suppliers has to be where the M local chain goes from here.
Morrisons have already addressed the viability issue by selling off unprofitable outlets, but it is probable that some branches in high-rent areas will be prioritised in terms of driving footfall and basket-size to improve the bottom-line, before decisions are made re lease-forfeiture/closure, with attendant write-off costs.
The key will be to establish a consumer-franchise to capitalise on small, local and more frequent shopping. This means that, having refined the formula, the focus will be on extending into neighbourhood areas, ideally with lower rentals and possibly going a franchise route…?
Either way, suppliers might usefully support a chain that will make an interesting 160-outlet investment-backed convenience chain customer firing on all cylinders, and possibly even realise a ground floor opportunity in what could become a significant player as it rises from the ashes of structural change in the grocery sector…
The issue for suppliers has to be where the M local chain goes from here.
Morrisons have already addressed the viability issue by selling off unprofitable outlets, but it is probable that some branches in high-rent areas will be prioritised in terms of driving footfall and basket-size to improve the bottom-line, before decisions are made re lease-forfeiture/closure, with attendant write-off costs.
The key will be to establish a consumer-franchise to capitalise on small, local and more frequent shopping. This means that, having refined the formula, the focus will be on extending into neighbourhood areas, ideally with lower rentals and possibly going a franchise route…?
Either way, suppliers might usefully support a chain that will make an interesting 160-outlet investment-backed convenience chain customer firing on all cylinders, and possibly even realise a ground floor opportunity in what could become a significant player as it rises from the ashes of structural change in the grocery sector…
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