Morrisons to Close 100 Convenience Stores, Blaming Government Policy for Rising Costs

Morrisons has announced plans to close 100 of its convenience stores in the coming months, attributing the decision to escalating operational costs, which it largely blames on government policy choices. These affected stores, part of the 2022 McColl's acquisition, have been underperforming for an extended period.

Impact of Government Policies and Inflation

The supermarket chain stated that recent government policies, such as increases to the national living wage and National Insurance contributions, have exacerbated the financial strain on these loss-making outlets. This follows earlier announcements of 52 cafe closures and 17 convenience store shutdowns last year, alongside 200 job redundancies at its Bradford headquarters last month.

While Morrisons has not specified the exact number of redundancies, it is understood that hundreds of staff will be affected. A company spokesperson indicated that efforts would be made to relocate affected employees.

Retailers across the UK have reported a surge in operational expenses since April of last year, including increased employer National Insurance contributions and elevated minimum wages. Additionally, the government's Extended Producer Responsibility (ERP) programme now levies charges on food and drink companies for packaging recycling costs.

Inflation continues to outpace the Bank of England's 2% target, with food price inflation reaching 3% in April, surpassing the overall inflation rate of 2.8%. Warnings have also circulated that food inflation could hit 10% by year-end, partly due to the regional instability caused by the US-Israel war with Iran.

Supermarket Sector Pushback

The government recently urged supermarkets to voluntarily freeze prices on essential groceries in exchange for regulatory easements. This suggestion, however, met with strong opposition from industry figures. Justin King, former Sainsbury's CEO, criticised the Treasury's request as