Morrisons goes local with deal for empty DVD shops

MORRISONS has stepped up the convenience store battle with its rivals after buying a large number of sites from the administrators of the collapsed DVD rental chain Blockbusters.

Bradford-based Morrisons has acquired 49 Blockbuster stores from Deloitte, as it begins to accelerate the expansion of its Morrisons M local convenience estate.

The deal follows Morrisons’ acquisition of seven stores that were once used by the collapsed camera specialist Jessops.

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A Morrisons spokesman said yesterday: “The Blockbuster purchase gives Morrisons quick access to a significant number of high street and neighbourhood locations across the country, particularly in south-east England as it accelerates the expansion of its Morrisons M local convenience offering.

“Morrisons hopes to have the stores trading by the end of the summer.”

The retailer plans to open at least 70 Morrisons M local stores by the end of 2013, starting with London and the South-East, where it has acquired a 100,000 sq ft multi-temperature distribution centre in Feltham, west London.

This will become the hub for a distribution network in the region and is set to open later this month.

Morrisons has also announced that its convenience stores will switch from the current M local name to a new Morrisons M local fascia.

Morrisons Convenience managing director Gordon Mowat said yesterday: “We are rolling out the Morrisons M local estate at pace this year and these acquisitions give us a kick-start in securing a solid foothold in this key sector.

“The convenience market is growing as more people shop locally and we want to be in a position to take advantage of this. Morrisons M locals offer a differentiated fresh shopping experience with half the space dedicated to fresh food and scratch cooking all at great prices.”

Deloitte partner Lee Manning said: “This transaction represents a good deal for both the creditors of Blockbuster and Morrisons, and we are pleased that these stores have found an alternative user that can create new employment.

“This group of stores forms a proportion of the Blockbuster package announced for closure last week and is expected to be the first of a number of group and individual store transactions to arise from the Blockbuster portfolio, given the significant levels of occupier interest for many of the assets”.

A Morrisons spokesman added: “Morrisons will use its position as the largest fresh food manufacturer in the UK to put fresh food 
at the centre of its convenience offer.

“All Morrisons M locals will have more than 100 lines of fresh fruit and vegetables as well as strong presence for fresh meat, fish and bakery.”

Morrisons has had a tough time recently due to a lack of online and convenience shopping.

Investors expect it to announce its long-awaited entry into the online shopping arena at its annual results next month.

Of the big four grocers, Morrisons was the biggest loser last Christmas.

Its like-for-like sales fell by 2.5 per cent in the six weeks to December 30.

Last week chief executive Dalton Philips said there are advantages to being a latecomer to online retailing.

“There are late-mover advantages such as around technology. It’s very hard to re-platform the websites. We are garnering knowledge on what is working out there,” he said.

Asked where Morrisons had lost out, Mr Philips said floating customers have gone online and to convenience stores.

“There are shoppers who are very promotional and shop around. Those are the ones we lost,” he said.

“Online is the fastest-growing segment and it’s an area we’re not in. We need to be in these new channels.”

Some analysts believe Morrisons is alienating core customers who believe the revamped Fresh Format stores mean a move away from the group’s traditional value credentials.

Last week, Mr Philips said these stores are seeing a four to six per cent increase in sales.

Morrisons’ shares enjoyed a welcome rise last week, as a new advertising campaign promoting its 100 per cent British beef credentials struck a chord with consumers, who had been angered by the horsemeat scandal.

The new campaign shows how Morrisons can track its meat from farm to plate.