Morrisons has agreed a long-term fresh produce and grocery supply deal with convenience store operator McColl’s.
The supermarket group will provide the convenience chain with Safeway products and national brands across its 1,300 convenience stores and 350 newsagents in the UK.
The deal follows Tesco’s £3.7 billion takeover of wholesaler Booker as the UK’s major supermarkets make increasing inroads into the growing convenience market.
New Safeway products have been in development since the end of 2016 when Morrisons relaunched the brand as a range for wholesale to independent retailers.
The range now includes more than 400 food items, according to City A.M., and McColl’s has been granted 12 months of exclusive access to the products.
Morrisons told City A.M. that it expects the deal to contribute more than £1 billion in wholesale supply sales “in due course”. The supermarket chain's CEO, David Potts, said: 'We are also pleased to be reviving the Safeway brand which we know customers will enjoy.'
He added: 'This new partnership is a further example of Morrisons leveraging existing assets to access the UK's growing convenience food market in a capital light way. Wholesale supply will help make us a broader, stronger business.'
Meanwhile, Jonathan Miller, chief executive of McColl's, called the deal a “defining moment”, building on the “transformational deal” the company announced last year to take over 298 convenience stores from the Co-op. This prompted a 7.6 per cent rise in revenues.
McColl's added that the new deal with Safeway will “significantly advance” its fresh food offer and improve the product range, Business Insider reported.
