Waitrose Focused On Growing Convenience Estate

 Namnews, 17th March 2023

Whilst Waitrose supermarkets suffer as shoppers shift some of their spending to cheaper rivals, the retailer has outlined its ambitions to continue growing its operations in the convenience channel.

Alongside disappointing year-end results, Waitrose revealed it was expanding its presence with third parties. It currently supplies 32 Dobbies Food Halls and expects to roll out to 50 branches by this May.

The retailer also began supplying 13 convenience stores in Scotland and Jersey during the last 12 months and opened 11 new Waitrose shops at Shell forecourts – taking the total to 80 – with plans for more this financial year. And the group is looking to expand its network of Little Waitrose stores to capitalise on more people shopping locally.

Meanwhile, its grocery on-demand partnership with Deliveroo has been expanded to 222 stores, with orders up 33% year-on-year.

Waitrose Executive Director James Bailey said: “It’s our belief we are underexposed in the convenience channel, and that is something that has held us back in the last year or so.”

Speaking about changing shopping habits and its impact on the chain’s performance, Bailey said: “Contrary to popular belief, Waitrose customers are very similar to everyone else’s customers so they’re not immune to the challenges of inflation.”

However, he added: “If you look at the Kantar numbers, most supermarkets last year have seen some of their customers shopping on a budget, and sometimes that involves shopping in discounters. So I don’t think we are more or less exposed than anyone else.”

Yesterday’s figures confirmed that Waitrose has been struggling amid the cost of living crisis. The upmarket supermarket chain’s total sales fell 3% to £7.31bn, with like-for-likes also down 3% as the business lost market share. The group noted that despite customer numbers increasing by 7% in the year, sales volumes were down 10% as people bought less on each visit.

Operating profits at Waitrose slid 12% to £894m, with the group blaming “challenging trading dynamics, inflation pressure and one-off cost inefficiencies, partially offset by cost savings and profit growth from new propositions”.

The retailer announced in February that it was investing £100m in new price reductions to win back shoppers.

Joe Dawson, Retail Analyst at GlobalData, commented: “With inflation forecasted to fall back in Q4, Waitrose will continue to play catch up in 2023. The retailer has already set in motion several plans in an attempt to recapture market share, but it will be an uphill battle for it to regain consumer confidence and entice shoppers back.”

NAM Implications:

• Waitrose needs time…
• …in a market environment that will not change significantly…
• …in terms of competitiveness for a decade.
• Meanwhile, suppliers have to optimise the ‘here & now’…
• Unfortunately…