Why Morrisons Is Closing Stores While Sales Are Still Growing

Morrisons Sales Growth and Store Closures Explained

Morrisons grew group revenue 3.2 percent to £15.8 billion in the year to October 2025. It posted 12 consecutive quarters of positive like-for-like sales. 

Yet it still closed 17 Morrisons Daily convenience stores as part of a wider 145-site rationalization.

The closures did not stem from falling demand. They targeted locations where operating costs had moved out of line with usage, volumes, and customer value.

 In simple terms, Morrisons is proving that a store can remain useful to customers and still be uneconomic for the retailer.

That matters because the action occurred in the same year underlying EBITDA stayed flat at £835 million despite £200 million in external cost headwinds from the 2024 Budget, inflation, and a first-quarter cyber incident. 

Statutory pre-tax loss narrowed to £381 million. Revenue and sales momentum continued while the retailer pruned the network.

Why Convenience Stores Are Becoming Less Profitable in the UK

Convenience stores operate with high fixed costs that scale poorly against typical small-basket, top-up purchases. 

Extended hours and local positions increase frequency but rarely generate enough revenue per square foot to absorb sustained increases in labor, energy, business rates, and logistics costs.

The 2024 Budget increases in employer National Insurance and the National Living Wage amplified labor pressure, the highest variable cost in small-format operations. 

Discounters and larger supermarkets continued to pull higher-value trips away, leaving convenience formats with a greater share of low-margin fill-in shopping.

Morrisons Daily Closures Show a Shift Toward Franchise Growth

The 17 Daily closures appear to have targeted precisely those sites where baseline operating costs were no longer justified by usage and customer value. 

Morrisons retained its remaining convenience estate, focused capital, labor, and supply-chain support on locations that still delivered commercial returns.

This move aligns with a multi-year cost-discipline program that has already delivered £845 million in cumulative savings. Store count is no longer treated as a growth proxy. 

Location economics now determine which convenience assets receive ongoing investment.

Morrisons is not retreating from convenience. 

It plans 250 new franchised Morrisons Daily openings and conversions in 2026, a capital-light route that shifts operating risk to partners better able to manage tighter cost structures.

Why UK Supermarkets Are Reviewing Convenience Store Locations

UK supermarket operators now face the same structural filter. 

Labor inflation, energy volatility, business rates, and logistics expenses consistently outpace the revenue generated by small-basket convenience trips in many locations. 

The result is a market correction: retailers keep sites only where local demand fully funds the full operating cost base.

Weak footfall or persistently low volumes convert once-viable stores into liabilities. 

Convenience delivers accessibility and repeat visits only as long as the fixed-cost structure remains supportable. 

When costs compress margins below acceptable levels, footprint discipline becomes the standard response.

What Morrisons Store Closures Mean for UK Grocery Retailers

Supermarket strategy has shifted from footprint expansion to footprint quality. Decision-makers must now measure contribution per location after full operating costs. 

Sites that clear the threshold receive continued investment. Those that do not exist, regardless of brand presence or community role.

The UK cost environment has converted convenience from a universal growth lever into a selective discipline. 

Survival depends on whether each location can still generate returns sufficient to justify its fixed costs. Store quality, not store count, has become the decisive metric.