McColl’s seeks bigger sites as part of expansion
Convenience chain McColl’s is on the hunt to acquire further larger-format convenience store sites to increase its share of the UK grocery market.
The company has expressed interest in vacant sites between 2,000sq ft and 4,000sq ft, and existing 2,000sq ft-and-up convenience stores that generate more than £20,000 of turnover a week.
All must be in ‘prominent’ residential locations with parking and nearby ‘complementary’ retail businesses such as hair salons, takeaways and pharmacies.
Wholesale and retail expert Martin Race said the chain faces challenges regarding its brand image. “McColl’s is after larger convenience stores because they have proved to be a profitable model, and it wants a slice of the pie,” he told betterRetailing.
Despite the chain stating it had seen “encouraging improvement” in improving its convenience offer, the company revealed it only wants those with “limited to no direct competition”.
Race said this may underline bigger challenges in changing McColl’s brand. “It wants the larger-format stores to accommodate trends such as chilled and food to go. However, in many towns, there are already many convenience stores with an over-reliance on fascias, and it will face tough competition,” he added.
“Like Bargain Booze, McColl’s has always been associated with a smaller off-licence chain, and it needs to get away from that association.”
The strategy comes as McColl’s recent results revealed it was having problems. Profits were nearly wiped out, with its wholesale agreement with Morrisons leading to “higher-than-anticipated cost prices”.
Race added stores acquired by the company will be able to differentiate through its wholesale agreement with Morrisons. “It’s a brand customers know, so it has an advantage there,” he said. “One of the challenges is that Morrisons has been predominantly known as a northern brand.”
Range reviews are ongoing at McColl’s, with further additions from Morrisons Safeway’s own label to be made available to stores first.
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