McColl’s shift to fresh produce was too little too late, says GlobalData

Following the news that McColl’s has fallen into administration; Honor Strachan, food & grocery analyst at GlobalData, a leading data and analytics company, offers her view: “McColl’s move to start selling fresh produce was implemented too late for the retailer to capitalize on consumers’ shift to local shopping during the COVID-19 pandemic. Stores stocked with Morrisons’ fresh produce reportedly performed well, but the rollout was not fast enough to secure footfall, as consumers turned to online shopping or nearby convenience stores that had better ranges and a more pleasant shopping environment. Indeed, much of the McColl’s estate is underinvested and has fallen behind the quality of rivals.

“Pre-pandemic, McColl’s held a stable share of the UK convenience market, estimated at 4% in 2019. However, this dropped to 3.3% last year–falling from seventh to ninth place in just two years. The retailer clearly failed to adapt to the swift changes in shopping habits, despite neighbourhood convenience players performing better than those exposed to urban areas.

“McColl’s tie up with Morrisons makes the grocer the most likely candidate for a late rescue bid, securing the future of its wholesale business and the Morrisons Daily fascia. However, Asda owners EG Group could scupper this, following reports that the company is looking to acquire the flawed convenience chain. During a period of intense cost pressure on UK grocers, and an unfavourable outlook for margins and profitability, an acquisition for either of the private equity owned grocers would be a massive undertaking and a distraction from their core business – especially as raising cash to help absorb these pressures and to invest in retail prices should be the primary focus this year.”