Waitrose fending off discounters with 'very British response' says Mark Price

The grocer, which this morning reported a rise in both sales and profits, has been using a range of tactics as it aims to stay ahead of the increasingly competitive market where Aldi and Lidl have been grabbing share.

Waitrose, whose share has also been rising as the big four remain under pressure, has been giving free coffee and newspapers to its MyWaitrose members and has also been pushing British products and its environmental policies.

“We’ve decided to compete in a very British way,” said Price. He said all grocers are asking themselves two questions: how can they respond to the internet and make their offer more experiential, and how do they respond to the German discounters?

Following the introduction of wine tasting in the Kingston store and dry cleaners to other shops, Price said Waitrose will launch more services this year as the grocer continues to differentiate itself from the competition.

The grocer is rolling out garden centres and coffee shops to further stores in a bid to improve the customer experience. “We’ve moved very strongly into the hospitality arena,” he said.

Waitrose operating profit increased 6.1% to £310m in the year to January 25. Sales were up 6% to £6.11bn while like-for-like sales increased 5.1%. Operating margin was flat at 5.4%.

The current year has started strongly, with like-for-likes up 5.1% in the first five weeks of the year.

Price said Waitrose had achieved a “quite substantial outperformance of the market” for five consecutive years.

He said that loyalty scheme My Waitrose now has 1.4 million members, and that 70% of sales are made using the card at present, which Price said was equivalent to Boots’ Advantage Card scheme. He added this “was achieved in a year and a half”.

Waitrose will invest £400m in the business this year compared with £300m last year, and will plough money into technology, infrastructure, prices and stores.

John Lewis chairman Charlie Mayfield said last year was a “good year for the Partnership”.

“We increased market share, we’ve now seen that for five consecutive years for both John Lewis and Waitrose,” he said.

He added that the growth has been “hard won” because consumer spending has not recovered.

Mayfield said activity in the housing market was positive, and said he hoped recovery in consumer confidence would soon begin to translate into greater spending.

Mayfield added that the partnership model had benefited the retailer in the face of rapid change in the retail sector. “Our ownership model has made a real difference,” he said. “We’ve been able to take a longer-term approach.”