Morrisons is preparing to shutter approximately 100 of its convenience stores in the coming months, with the supermarket chain attributing the decision to significant cost increases stemming from government policy choices. The company stated that the affected Morrisons Daily outlets, acquired as part of the 2022 McColls acquisition, have been loss-making for an extended period.
According to Morrisons, the challenges faced by these stores have been exacerbated in recent years by "significant cost increases resulting from government policy choices," though specific details were not elaborated upon. This move follows a previous announcement last year detailing the closure of 52 cafes and 17 convenience stores, which put hundreds of jobs at risk. Additionally, the company disclosed last month that around 200 jobs were potentially affected at its headquarters in Bradford.
The supermarket chain described the proposal to close more Morrisons Daily stores as a "tough but necessary decision," indicating that more staff would be at risk of redundancy and that a consultation period is set to commence shortly. Morrisons did not immediately specify which of its nearly 1,700 Morrisons Daily stores are slated for closure. However, it noted that the targeted locations are those that have experienced performance challenges for several years and are currently loss-making, despite remedial actions.
Morrisons added that the current situation has been made more difficult for returning these stores to profitability by the escalating costs linked to government policies. Many retailers have cited increased employer National Insurance contributions and higher minimum wages as contributing factors to rising operational expenses since April last year. Furthermore, food and drink companies now face charges for the cost to local councils of recycling packaging under the government's Extended Producer Responsibility programme.
Despite these planned closures, Morrisons maintains a "robust expansion plan" for 2026, with opportunities identified to open hundreds of additional franchise stores in the coming years. The company reported opening more than 120 franchise locations last year alone.
Meanwhile, the broader economic climate in the UK continues to be influenced by persistent inflation. The Bank of England's target of 2% for inflation has been consistently exceeded. Recent figures for April indicated that the annual rate of food price increases stood at 3%, surpassing the overall inflation rate of 2.8%. Concerns have been voiced regarding the potential for UK food inflation to escalate to 10% by the end of the year, with some attributing this to geopolitical factors such as the conflict between the US and Iran.
In a related development, multiple supermarket sources indicated this week that the government had encouraged them to voluntarily freeze prices on essential groceries in exchange for regulatory relief. This suggestion reportedly met with strong opposition from industry leaders. Justin King, former CEO of Sainsbury's, commented that the British supermarket sector is already highly competitive and characterized the Treasury's request as "hypocritical," arguing that its own policies contribute to inflation.
