Any sort of in-store production is going to be inefficient compared to baking a brought-in frozen product, because (taking the Coop as an example):
1 - a handful of regional bakeries have economies of scale that 2,700 stores don't
2 - maintaining high availability is easier because the stores only have to manage the finished goods (and probably only dealing with one supplier not multiple raw materials suppliers)
3 - from a system point of view its a bit more complicated to manage items that are required, but aren't sold in their own right (how to give the system the visibility of what's in the store, how to know exactly what's been used because it'll vary from bake to bake etc)
4 - easier to manage staffing as in-store baking of frozen bread is relatively unskilled and enough staff can be trained to guarantee someone is always available if stock is required; with scratch baking its more complicated and probably more expensive
The negatives are:
1 - more money tied up in stock
2 - paying a profit margin to the outside baker
For the retailer, it'll depend on the trade off between these things, and more importantly customer perception and sales
I believe the regular bread loaves and rolls are still made from scratch in most Morrison's.
About 65% of the range is scratch baked in stores, so presumably that represents a bigger percentage of sales as it'll surely be the core range of fast selling products