The Safeway brand is to appear across 1,650 newsagents from January next year, following a major supply deal between Morrisons and convenience chain McColls.
The agreement means Morrisons will supply McColls’ stores with 400 products such as Safeway-branded cheese. Morrisons acquired Safeway in 2004 for £3bn, with the Safeway name disappearing soon after.
McColls is to be granted a year’s worth exclusivity of the Safeway name. Morrisons will also supply other branded goods to McColls, which should mean it gains wholesale sales of £700m by the end of next year, with the amount rising to £1bn in due course.
The deal comes on the back of a positive start to the year for both companies. Morrisons, which is the UK’s fourth-largest supermarket, recently reported a return to annual sales growth for the first time in five years. McColls’ latest figures show a rise in revenue of 7.6 per cent after it acquired nearly 300 Co-op stores at the start of 2016.
Morrisons announced late last year that it planned to resurrect the Safeway brand.
The retailer is moving beyond its core supermarket model. It recently launched one-hour delivery through the Amazon Prime Now service and has opened several Morrisons Daily convenience stores in petrol stations.
Other supermarkets are also moving beyond large stores. Tesco is in the process of buying wholesaler Booker, which owns the Londis brand, while Sainsbury’s acquired Argos last year.
All the major supermarkets are locked in a bitter price war with German discounters Aldi and Lidl, and they are also suffering from an unexpected slowdown in consumer spending.