Aldi’s latest results and investment plans, the new M&S and Sephora partnership, Morrisons’ move to dispose of underperforming pharmacies and Co-op’s proposed remedy to enable integration of Southern Co-op.
At a Glance
In this instalment, our UK analysts offer their take on some of the market’s latest developments and initiatives. Here’s what you need to know about:
Aldi announces record results and investment, plus quick commerce partnership
The discounter announced a record £19bn sales for its UK&I operations for the year ending 31st December 2025. It has also announced a further investment of £900m throughout 2027, focusing on its distribution centres and on expanding its network but a further 40 stores to reach underserviced communities. The announcement followed closely after the news that Aldi would be trialling a partnership with Deliveroo to further support growth.
Senior Insight Analyst, Michela Pearson’s view:
Aldi’s growth of 5% year-on-year demonstrates how the expansion strategy and continuous investment in price is resonating with British and Irish shoppers, although operating profit has remained in line with the previous year due to investments in supply chain, price and staff pay. The new partnership will Deliveroo, which will see riders pick orders in store as opposed to staff, will continue to fuel Ald’s goals to reach more shoppers as the first quick-commerce offer from a discount store.
M&S and Sephora partner to create beauty destinations
M&S have announced a strategic partnership with Sephora to create a Sephora destination within selected M&S stores and online. The release for this will be in Spring 2027 in 100 M&S stores. The partnership brings Sephora to more people and improves M&S’ Fashion, Home and Beauty offering. Customers can expect a curated range for the launch which will likely draw lots of anticipation closer to the date.
Analyst, Seth Russell‘s view:
while a lot of the focus has been on M&S expanding its store estate and pushing to double the size of its food business, this partnership announced balances the efforts showing how the retailer is strategically investing in its different business sections to bring more value to its customers. The partnership doubles as a visibility driver for Sephora as it continues to break into the UK market, and has an alluring effect for M&S as shoppers who have engaged with the (Sephora) brand online may head into stores to take a look at the new range, which will include exclusive products.
Morrisons begins selling off underperforming in-store pharmacies
Morrisons has begun the sale of in-store pharmacies as part of its drive towards improved operating efficiency and increased profitability. Following the results of an internal review that recommended certain pharmacies would be better suited to operating as independently run community pharmacies, underperforming pharmacies are being sold on a branch-by-branch basis. Pharmacies sold are expected to continue operating from Morrisons stores under the branding of new owners. The sales are the latest stage of efficiency measures that have seen Morrisons close cafes, florists, Market Kitchen counters, convenience stores.
Senior Insight Analyst, Alex Rowberry’s view:
The pharmacy sales are another example of Morrisons simplifying its operations and focusing resources on areas that can deliver the strongest returns. Importantly, pharmacies remaining in-store allows Morrisons to retain their potential as a footfall driver while transferring their operation to specialist providers.
CMA to accept Co-op remedy for Southern merger
Having identified some local competition concerns in Co-op’s proposed integration of Southern Co-op, the Competition & Markets Authority (CMA) has indicated it is likely to accept Co-op’s suggested remedy to dispose of 15 convenience stores and one crematorium from the new joint business. This would clear the way for Co-op to progress the full integration of Southern Co-op’s operations with its own. Following the completion of its acquisition of Southern in July Southern has remained a wholly separate operating entity pending the CMA’s findings. With 15 disposals enacted the new enlarged Co-op will gain 158 additional food stores, taking its total to 2,488 with enhanced coverage especially in counties such as Hampshire, Sussex, Dorset and the Isle of Wight.
Insight Partner, Patrick Mitchell-Fox’s view:
While certainly offering a boost to Co-op’s revenues and additional scale in the food retail sector, the acquisition of Southern seems effectively to have been a ‘rescue’ and may also bring some additional challenges to its new parent. The trigger for the merger came from the deepening financial difficulties Southern has faced in recent years, something exacerbated by the disruption of the cyber-attack suffered by Co-op in H1 2025. In the last reported year (2025/26) Southern fell to an operating loss of £35m, facing falling sales and trading profit plus sharply rising operating costs. Recognising the unprofitability of a number of its stores Southern has already disposed of 26; whether Co-op will see fit to rationalise the estate further remains to be seen. However, having seen its own profitability suffer in the recent past Co-op is likely to act quickly to ensure that all acquired stores are more of a boost than a brake to its earnings.
Unitas Wholesale announces new CEO
The UK’s largest wholesale buying group, Unitas has announced that David Cooke (currently chief operating officer) will succeed John Kinney as its chief executive from 1 January 2027, when Kinney will step down. Having led the group for the last six years, John Kinney will take over as its non-executive chairman from Jason Wouhra of Lioncroft Wholesale, whose three-year term in that role will terminate at the end of 2026.
Insight Partner, Patrick Mitchell-Fox’s view:
David Cooke joined Unitas as chief operating officer in August 2025, having previously served as chief commercial officer for the multi-platform, midlands-based wholesaler and distributor AF Blakemore. Understanding the different channels of wholesaling is key to leadership at Unitas which has a broad-based membership that includes operators with customer bases ranging across retail, foodservice and on-trade drinks. As a buying group Unitas needs to work to meet needs in all these areas, leveraging combined membership scale to the best effect where one size often does not fit all.
Iceland Foods to begin calculating markdowns with AI to reduce food waste
Iceland is set to roll-out the AI platform WasteInsight, a tool created by Retail Insight. The technology identifies expiry times and calculates the rate of markdowns on a day-by-day basis. The system is directly linked to Iceland’s stock management system and other store data, making the calculations as accurate as possible. The platform is also able to identify instances where it is better to donate directly to food donation charities, improving the retailer’s food waste redistribution.
Analyst, Seth Russell‘s view:
in Q3 2026, we saw the enhancement of Retail Insight’s WasteInsight platform to include a Predictive Waste feature able to accurately predict sell-through patterns to calculate markdowns which are sent to staff up to a week before sell-by. This implementation of the new technology by Iceland shows how data and AI can be used as an ally in everyday retail processes, reducing the time taken to individually look through and calculate markdowns on products and allowing for more proactive food waste reduction.
What to read next: Can Unbeatable Prices sustain Morrisons’ recovery?
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