Waitrose set for UK growth via convenience and online
The upmarket retailer’s agriculture director Duncan Sinclair told a farming conference last week that convenience stores and online sales offered significant potential.
“For us, the two big growth areas and opportunities we see in the market are convenience, so we are investing in the Little Waitrose concept … and e-commerce,” said Sinclair.
Little Waitrose stores – usually about one sixth the size of standard branches – focus on food-to-go products. Often sited close to train stations or in high street locations, the store closures of recent years were providing ample opportunity for growth, he said.
“By 2020, the aim is to get that [number of convenience stores] up to over 200 locations,” said Sinclair. “That will be roughly up to 100 within the M25 [motorway area] and the other 120 or so in the south east of the country.”
Growth in the south east would be matched by increased sales throughout other parts of the UK, he predicted.
‘Tremendous scope as we move further north’
“There is tremendous scope for us as we move further north in the country,” said Sinclair. “Last summer we opened a central distribution centre at Chorley in Lancashire and we are going to use that to develop our business from the midlands of England, northwards into Scotland and potentially across into Northern Ireland.”
But the growth of Waitrose’s e-commerce business had prompted a debate about whether to invest in online or physical stores. After initial mistakes with the retailer’s website, Sinclair said significant investment had delivered online sales growth of about 40% year-on-year in 2013 and a similar rise the year before.
“It has certainly highlighted within the business the clicks versus bricks discussion,” he added. Last year Waitrose opened a distribution warehouse – or so-called dark store – in East London where products are prepared for home delivery.
‘The equivalent of over 35 branches’
“From that one location, we are delivering the equivalent of over 35 branches direct to homes. So, do we need to go and build more new branches?”
For the London area at least, apart from convenience stores, the answer was probably no, he said. Instead, Waitrose would probably build another dark store to service the other side of London.
Aside from investment, two other reasons behind the success of online sales were the involvement of experienced staff and the opportunity to explain about the products’ provenance.
“There has been significant investment within the online business and some of the key people that I have worked with are now involved in that side – taking their experience from buying in meat categories and transplanting that into the e-commerce channel. It is certainly contributing to our strong performance in the market place.”
Waitrose’s online presence also offered the chance to explain the retailer’s close relationship with suppliers. “It’s an opportunity for us to speak to our customers when they are hovering with their mouse online – and speak to them about provenance and products.”
As the Co-op sells its farms, Waitrose will soon become the only retailer to own a farm – “offering a significant point of difference in the market place”, he said.
Sinclair was speaking at the Farmer Conference, organised by grain marketing organisation Openfield at Towcester Racecourse on April 2. At the same event, Jonathan Warburton, chairman of Warburtons, blamed the horsemeat scandal on the “more for less” culture in the food industry supply chain.
Meanwhile, Waitrose held on to its record 5% share of the UK grocery market during the 12 weeks ending March 30 2014, according to the latest figures from Kantar Worldpanel.
