Morrisons and Motor Fuel Group (MFG) have ditched their convenience store trial, and the supermarket group has instead opted to roll out Morrisons Daily with Gerald Ronson’s Rontec group of forecourts.
MFG will convert the five stores it piloted with Morrisons to the Londis brand next month, which already features on more than 300 of its 406 forecourts.
The news came on the announcement of full-year pre-tax profit up 50% from £217m to £325m on turnover up 1.2% from £16.1bn to £16.3bn despite store closures.
David Potts, chief executive, told C-Store in an early-morning conference call, that following the trial of 10 convenience stores with Rontec, another 40 would open by the summer.
Potts said Morrisons “learnt a lot” from the trial with MFG but the arrangement with Rontec was “cleaner” and Morrisons Daily would be the fascia going forward.
It was “likely” Morrisons would continue to work with Palmer & Harvey to service those stores.
“Rontec have acquired a number of stores over recent times. It’s quite a sizeable business across the nation and therefore if both sides like the way the arrangements work for Rontec’s customers then I’m sure we can do more,” said Potts.
The deal with Rontec was not exclusive and Potts stressed he was open-minded about opening convenience stores with other companies “that put customers first and share the values of Morrisons.”
Asked if Morrisons would do deals with entrepreneurial independents, Potts again said the group was “open-minded…we are always available”.
Potts also reconfirmed his plan to revive the Safeway brand, with products being sold wholesale to independent retailers.
“We are on track with the Safeway brand to be really clear. It’s a brand that does resonate with the public and I’ve seen the initial products. We would expect to introduce it in our role as wholesaler to the industry again before the interim.”
He said “the key thing” around all the initiatives with convenience was that convenience as a channel was in growth, and Morrisons was in recovery and where it could take “capital-light opportunities to broaden our brand and our reach we should do”.
The year ending January 29 saw like-for-like sales excluding fuel and VAT climb 1.7%. The “Fix, Rebuild and Grow” strategy was starting to build a broader, stronger group.
Andrew Higginson, chairman said: “Food retail is a simple business, but it is not easy. Only consistent and outstanding execution differentiates.”
Potts added that Morrisons was confident it could continue to turn around and grow the group,
“There are some uncertainties ahead, especially around the impact on imported food prices if sterling stays at lower levels. We also expect depreciation and pension costs to increase, and we will continue to invest in colleague pay rates. However, all of this is incorporated into our plan.”