Hard To Make Money At The Moment, Says Boss Of Waitrose But Still Focused On Quality

 Namnews, 27th February 2023

With cash-strapped consumers looking to save money on their grocery shopping, Waitrose has been forced to cut prices whilst maintaining quality, to stop its customers from switching to cheaper rivals.

Speaking to the Financial Mail on Sunday, James Bailey, Executive Director for the upmarket supermarket, said: “It’s really hard to make money at the moment.”

He admitted that the chain had been “behind the market” for the past nine months, with its market share sliding alongside the fall in consumer confidence.

Waitrose, regarded to be a cut above on quality but also on price, is especially feeling the pinch as consumers face high energy and mortgage bills.

Bailey told the newspaper that the supermarket has to tough it out and wait for a lift that can only come from a more buoyant economy.

However, he noted that its recent price-cutting initiative on everyday items was proving popular with its regulars and that customers who defected to cheaper chains are already waking up to the newly trimmed prices.

“Customers don’t have to compromise on the standards they expect from us when they are buying our Essentials range – and actually the prices are fantastic,” he said. “It’s kind of a hidden gem – although we keep trying to unhide it. Things like the pork sausages – they’re from outdoor bred, British high welfare pigs. That commitment applies to all our pork ranges.”

In the interview with the Financial Mail on Sunday, Bailey suggests that some competitors amongst the traditional big four supermarkets are quietly making compromises to maintain profit margins or keep prices down.

He said: “Inevitably, if big retailers look at the cost of goods and everything else, there is an ongoing temptation to take some of that quality out if you need to maintain returns to shareholders and keep up with your price message.”

Meanwhile, Bailey stated that Waitrose would not ditch its fresh produce counters, as Sainsbury’s and Tesco have done. He said: “Soon there will be a moment when, if you love food and care where it comes from, you are running out of places where you can get that. All of which is an opportunity for us.”

Compromising on quality, he states, “is just not how Waitrose was built. It’s not in our DNA.”

Waitrose and its sister chain John Lewis have been losing money for more than two years. Waitrose’s performance is especially troubling as it has historically provided a financial backbone for the group as John Lewis department stores struggle on a crumbling high street.

The group’s financial results due next month will reveal the extent to which the cost of living crisis is affecting the business.

Asked whether he is optimistic about the year ahead, Bailey said: “If we start to see consumer confidence come back and things this year don’t turn out to be quite as bad as people feared, then yes. We’re starting to see green shoots a bit. It’s our job to ensure we’re in brilliant shape for that.”

Commenting on its future plan, he revealed that a revamped forecasting system will be fully operational next year to ensure stock arrives “in the right place at the right time and in the right quantities.”

Bailey wants to have John Lewis concessions in all 330 Waitrose shops, up from the current 88. He also thinks its Little Waitrose convenience outlets, about three-quarters of which are run in partnership with the likes of Shell, could rise by 200, doubling the current total.

“We don’t necessarily need more big Waitrose shops. But I think we are going to put the pedal down on our own convenience estate,” he said.

But he noted that money is in short supply. “Because of inflation and our focus on the medium-term, we have to think carefully about where we spend and not take too many risks,” Bailey said.

NAM Implications:

• ‘wait for a lift that can only come from a more buoyant economy…’
• Anyone anticipating a return to ‘old normal’ within less than five years needs evidence.
• Meanwhile, we all love Waitrose but ‘needs must’.
• One of Waitrose’s original appeals was a feeling of ‘full & plenty ‘ instore, but stock management issues have resulted in on-shelf availability gaps.
• Growing the convenience estate should help…
• But there is a limit to how long a company can afford to lose money.
• Fingers crossed…