Bradford-based supermarket group Morrisons announced a long-term wholesale supply initiative with convenience retailer McColl’s which it said will take its wholesale supply sales eventually to more than £1 billion.
Morrisons said it will become the “sole UK wholesale supply partner for McColl’s.”
McColl’s said the partnership will provide it with a “best-in-class fresh food and grocery offer through the relaunched Safeway brand” which it will enjoy exclusively for a year.
Morrisons will supply both Safeway and branded products to McColl’s with a phased rollout programme starting in January 2018.
“Morrisons is to start supplying both Safeway products and national brands to 1,300 McColl’s convenience shops and 350 newsagents across the UK,” said Morrisons.
“The new partnership will replace all McColl’s existing supply arrangements in time.
“Morrisons will supply McColl’s shops, with a phased programme starting in January 2018.
“By the end of 2018, we expect total annualised wholesale sales to all our partners to be in excess of £700 million …
“We expect this new initiative to make an initial profit contribution in 2018/19, and increase thereafter.”
Morrisons CEO David Potts said: “We are very pleased to partner with McColl’s, and look forward to developing a long and successful relationship together.
“We are also pleased to be reviving the Safeway brand which we know customers will enjoy.
“This new partnership is a further example of Morrisons leveraging existing assets to access the UK’s growing convenience food market in a capital light way.
“Wholesale supply will help make us a broader, stronger business.”
Initially, Morrisons will supply 1,000 McColl’s convenience shops and 350 newsagents with the remainder of the McColl’s estate — the 300 recently acquired Co-op shops — migrating in due course.
McColl’s CEO Jonathan Miller said: “As a large, leading multiple grocery retailer with its own outstanding food manufacturing capability Morrisons stands apart from the competition, and we are truly delighted to be entering into partnership with them.
“In McColl’s, Morrisons gain a long-term partner of significant scale with a growing neighbourhood convenience estate and in Morrisons we gain access to their best-in-class sourcing and manufacturing capabilities.
“This will enable us to provide our customers with the highest quality fresh food through the relaunch of the much loved and trusted Safeway brand.
“This is a defining moment for McColl’s and builds on the transformational deal we announced last year to acquire 298 high quality convenience stores.”