McColl’s results show new status as a major convenience player

McColl’s has increased the number of convenience stores in its estate by 80% in the last three years alone, according to its latest annual report.

The retailer’s 1,292 convenience stores represent more than 70% of its shops and the recent Competition and Markets Authority report into the Tesco-Booker deal described them for the first time as representing “a strong presence in the convenience sector”.

McColl’s strength in store numbers is boosted by its “on time and on-budget” integration of the 298 Co-Op stores it purchased late last year.

Describing the company as “a leading neighbourhood retailer”, CEO Jonathan Miller said: “Our focus remains on enhancing our convenience proposition through growing market share, developing our product ranges and delivering excellent customer service.”

Of particular importance is the growth of its fresh section. Miller added: “Our margins are highest in our convenience stores, particularly those that carry bigger ranges of the higher margin categories such as fresh food and grocery.”

McColl’s is using this new convenience muscle to throw its weight around. The group has formally announced the re-tender of its wholesale agreement with Nisa – a move which would destabilise Nisa’s 2021 £2bn revenue plan. According to The Telegraph, McColl’s has received “more than five” first round submissions.

The CMA’s decision to take on board much of McColl’s evidence in the Tesco-Booker deal, its stated objective of grabbing any One Stop stores that Tesco are forced to sell, and its meddling in the Sainsbury’s-Nisa negotiations further point to its growing presence in the convenience market.

However, it’s not all good news for McColl’s, the chain suffered a 50% drop in profits despite an increased revenue, and the company’s failure to get rid of all its poor performing newsagent as previously planned has led to a new investigation of what to do with the remaining shops.

Also sluggish is the company’s Subway roll out. First announced in early 2015 and reconfirmed in 2016, McColl’s only managed to open five Subway outlets in the last year. The company said it had a “broader plan for 2018” in terms of partnerships with the sandwich chain.