Waitrose has reported a 5% drop in like-for-like sales to £3.6 billion as analysts warn the grocery retailer needs a strong Christmas to compensate for its losses caused as a result of the cost-of-living crisis.
GlobalData retail analyst, Amira Freyer-Elgendy, said the retail giant‘s decision to stay “relatively quiet in the face of the cost-of-living crisis for much of the year has come at a cost”, adding that Waitrose has “failed to keep up with rivals’ timely responses to the rising pressures on consumer budgets.”
Speaking of the retailer’s latest half-year trading update which was released today, 15 September, Freyer-Elgendy added: “There is no mention of an improved performance in June and July, like we have heard from Asda and Ocado.”
She said this is an indication that the second half of the financial year will also be challenging for Waitrose as “operating profit will also continue to be under pressure as costs and inflation pressures continue to climb.”
According to Kantar data, price inflation hit a new record of 12.4% in August, adding £571 to the average annual grocery bill.
Freyer-Elgendy warned that as food inflation is now forecast to peak in the final quarter of 2022 and the first quarter of 2023, Waitrose will need a boost in Christmas sales to mitigate inflationary cost pressures.
She said: “Relaunches, value campaigns, diversifying its business portfolio and expanding its Deliveroo partnership are strategies to reverse the downward trend, but some of these come too late in the game.”
“While Waitrose is slightly more protected from the crisis due to a skew in more affluent customers, GlobalData’s retail survey from August highlights that 27.9% of AB consumers will buy fewer items when faced with price increases – a shift Waitrose is already seeing as average transaction values decline.
“The grocer will see more of its customers become ‘high-low’ shoppers, purchasing treats and premium quality or specialty goods at Waitrose but switching to the discounters or Tesco for everyday staples and household goods.”
To maintain its customer loyalty and appeal against its competitors, Freyer-Elgendy said that Waitrose will need to “justify price points across its full range, carefully market its Essentials label to showcase value and affordability, and encourage dwell time to protect baskets sizes from further erosion.”
