ESM: European Supermarket Magazine is proud to unveil 'The A-Z of Retail', a new subscriber-only series that offers a deep analysis of the retailers, suppliers and individuals making the news each week. Today: W is for Waitrose.
Things are not looking all that rosy for upmarket UK retailer Waitrose.
The annual results of its parent company John Lewis Partnership showed that the supermarket chain (along with the John Lewis department stores) is in need of tough decisions, as consumer spending habits become more subdued in the run up to Brexit.
While sales were up for both in 2017, by 1.8% at Waitrose and 2.2% at John Lewis, overall profit before exceptional items tumbled 21.9% to £289.2 million.
The Partnership’s operating profits fell a steep 32.1% to £172 million, which the company partly attributes to its decision to avoid forcing cost price inflation onto its customers.
"As we anticipated, 2017 was a challenging year," Sir Charlie Mayfield, chairman of John Lewis Partnership, explained.
Brexit Uncertainties
Many of the uncertainties stem from the messy Brexit negotiation process and a lower retail appetite by consumers with higher spending power - Waitrose's target audience.
Although spending is back on the up since the beginning of the new year, a slump during what should have been a ‘Golden Quarter’ in the run up to Christmas is appearing to weigh heavily on the retailer.
In February, a Which? shopper survey revealed that Waitrose has fallen out of favour among Britons, with discounter Aldi usurping its throne as most popular supermarket in the UK. Waitrose fell to fourth place, behind Marks & Spencer and Lidl.
The retailer has also seen a mixed response to its decision to end its ‘Pick Your Own Offers’ loyalty programme, introduced in 2015, where customers with a myWaitrose card could decide which products they wanted to receive 20% off.
One shopper put it succinctly in their response to Waitrose on Twitter:
Thanks @waitrose - I'm certain you'll be able to select better offers for me than, you know, the ones I deliberately choose for myself... 🤔 #Waitrose #PickYourOwn pic.twitter.com/5CgV4PVgtY
— Paul James (@paulj85) February 9, 2018
Out Of Character
That aside, Waitrose has built a reputation for being very in touch with trends, and the retailer enjoys one of the most loyal customer bases in the UK. On several fronts, it has been a pioneering force in areas such as packaging waste and childhood obesity.
At the beginning of the year, Waitrose was the first UK retailer to announce it stop selling energy drinks to under-16s, following the guidelines of the European Food Safety Authority.
It also decided to take a stance on plastic waste, by pledging to phase out black plastic packaging by 2019, and pledged to stop selling packs of disposable plastic straws from September 2018, replacing them with non-plastic alternatives.
Product Launches
The retailer has also grabbed the attention of consumers with a succession of off-the-wall product launches.
From its ‘Sprout Wreath’ and Brussels sprouts-themed dessert during the Christmas season, to its white aubergines called ‘snowbergines’ and its avocado-shaped Easter chocolates, the retailer really has flexed its creative muscles.
Building on this commitment, the supermarket is expanding its food innovation centre at its Bracknell head office by doubling its number of chefs by the summer.
But the recent sales performance will likely bring Waitrose back down to earth somewhat, and make it focus on what is most important - upmarket goods at the right price.
As Brexit approaches, and Aldi and Lidl continue to eat away at its consumer base, the retailer will be hopeful that a 'back to basics' approach can help it maintain its performance as one of the UK's best-loved grocers.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.
