Morrisons wins control of McColl’s convenience store group saving scores of north and north-east jobs

By Kelly Wilson

May 9 2022, 2:00 pm

McColl's in Ellon, Aberdeenshire.

McColl’s shops across the north and north-east will keep their doors open as supermarket firm Morrisons has been successful with a takeover bid.

McColl’s is a stalwart of the high street and is one of Britain’s biggest convenience chains employing around 16,000 people.

The future of these jobs and a network of 1,100 shops has been secured after it was confirmed that the big four supermarket group beat the owners of Asda to snap up the chain after it collapsed into admistration last week.

Both Morrisons and EG Group, owners of Asda, are thought to have both submitted bids to administrators over the weekend.

Strong presence across the north & north-east

It currently has 36 shops across the north and north-east in locations including Aberdeen, Kemnay, Ellon, Huntly, Buckie, Peterhead, Elgin, Inverness and Forres.

The deal also ensured Morrisons will rescue the group’s two pension schemes which have more than 2,000 members.

Administrators said the Essex-based chain which has its roots in Scotland had faced financial pressure over recent years resulting from Covid-19 related disruption and, most recently, supply chain challenges, creating issues in product availability.

McColls also operates 270 Morrisons Daily concessions under an agreement with Morrisons.

Morrisons, which is the UK’s number four supermarket group behind Tesco, Sainsbury’s and Asda, has been owned since October by US private equity group Clayton, Dubilier & Rice (CD&R).

EG Group is controlled by Mohsin and Zuber Issa, the billionaire brothers who bought Asda from Walmart in a £6.8 billion deal last year, and the private equity firm TDR Capital.

Fears of job losses

Scores of people across the north and north-east faced being left without a job after McColl’s called in administrators last week.

The convenience store group confirmed it has appointed PriceWaterhouse Coopers after being left with “no choice” after discussions with its lenders collapsed on Friday as creditors refused to extend a deadline for the retailer to find more cash.

Rob Lewis, joint administrator and partner at PwC, said: “Especially during the current economic climate, the completion of this transaction provides much needed certainty to McColl’s 16,000 staff after a period of understandable concern following the group’s challenges over the past months.

“As well as saving thousands of jobs, this deal secures a platform for the trustees of the group’s pension schemes to enter into arrangements which will protect the pensions entitlements of so many people.

“All in all, a really positive outcome.”

He added a wholesale supply agreement established between the two firms before the rescue “will continue in place after the transaction minimising disruption to customers and employees as all stores will continue to trade”.

He added: “We wish Morrisons well with integrating McColls into their business.”

Exterior of where the robery happened at the McColl's store in Ellon. — McColl’s store on Provost Davidson Drive in Ellon.

Staff pensions need protected

A spokesperson for the trustee of the McColl’s Pension Schemes had warned staff could miss out on payments following administration and urged any new owner to protect the schemes.

They said: “The pension schemes are significant stakeholders in the company, and the trustees call on all potential bidders to make clear that they will respect the pension promises made to the 2,000 members by McColl’s and its subsidiaries, and will not seek to break the link between the schemes and the company.”

The trustees added: “Breaking the link between the schemes and the sponsor company, by way of a pre-pack administration, would represent a serious breach of the pension promises made to staff who have served the business loyally over many years, and risks causing the schemes to enter the Pension Protection Fund with a resulting reduction in benefits.”

Robert Gordon University senior lecturer in retail and marketing Andrew Turnbull highlighted that the chain’s underlying business was good. He said: “McColl’s business model is, in fact, workable.

Garthdee. Professor Andrew Turnbull from RGU. Photo Kath Flannery

“The tie up with Morrison’s represented a partnership that was able to compete on local high streets with other convenience operators, including Tesco Express and Sainsbury Local.

“Servicing high levels of debt, however, and low footfall resulting from the pandemic, plus some concerns over the product mix has worked against the company.”

Robert ‘Bobby’ McColl

RSM McColl’s in Scotland was founded by football star Robert Smyth “Bobby” McColl in 1901.

He set up the newsagent chain alongside his brother Tom.

He played for a number of football clubs including Queens Park, Newcastle United and Rangers as well as for Scotland.

Robert Smyth McColl (13 April 1876 – 25 November 1959) was a footballer and co-founder of the newsagent RS McColl.

In 1912, his penultimate game was against Port Glasgow Athletic where he scored 6 goals, which is still a record to present day.

Mr McColl also played 13 games and scored 13 goals for the Scotland national football team and he was inducted into the Scottish Football Hall of Fame in November 2011

He is the only player to have scored a hat-trick against each of the other home nations.