£1bn Safeway deal snared by Morrisons from rivals

MORRISONS has sealed a £1bn deal to stock convenience shop chain McColl’s with groceries.

In an agreement which has angered rival chains, who had hoped to secure the lucrative contract, Morrisons will resurrect the Safeway brand and supply products across McColl’s 1,300 convenience stores and 350 newsagents.

McColl’s will be exclusively supplied with around 400 Safeway own-brand products from January next year. It will mark the return of the supermarket whose shops closed in 2005.

McColl’s will also benefit from Morrisons’ fresh food offer, including its bakery and sandwiches as well as its branded products like Flora margarine and Yeo Valley yogurts.

The £1bn contract is a major boost for Morrisons which has been revitalised under boss David Potts, and has seen a turnaround in sales. The grocery industry has been consoli- dating in recent months to combat the threat posed by Amazon, which bid £10.7bn for organic retailer Whole Foods in June.

Tesco hopes to close a £3.7bn takeover of convenience chain Booker by Christmas, while Sainsbury’s is rumoured to be pondering a takeover of Nisa.

Morrisons won the contract with McColl’s over rivals thought to have included The Co-op, Nisa and Palmer & Harvey. McColl’s was previously supplied by Palmer & Harvey and Nisa.

Potts said Morrisons is ‘pleased to be reviving the Safeway brand which we know customers will enjoy’.

Nick Read, chief executive of Nisa Retail Limited, said: ‘We are disappointed that the tender process has been halted nine weeks early – before there had been a chance for follow up conversations and proposals, especially when sales at Nisasupplied McColl’s stores were 8.4pc ahead of budget.’