Times are tough for all retailers at the moment – but upmarket supermarket chain Waitrose is having a tougher time than most.
Recent trading results have seen a 5% drop in like-for-like sales to £3.6 billion, while the latest Kantar data also saw sales decline for the premium-priced retailer as consumers look elsewhere to save money.
The difficulties Waitrose is facing are a reflection of the UK’s wider economic downturn; as the cost-of-living worsens and inflation spirals, consumers are resorting to seeking out more value-oriented retailers for better deals.
At the same time, analysts are warning that the grocery retailer needs a strong Christmas to compensate for the losses caused as a result of the cost-of-living crisis, accusing it of failing to “keep up with rivals” with regards to the rising pressures on consumer budgets.
It’s fair to say that the situation for the upmarket chain looks rather bleak.
The supermarket’s chief executive James Bailey addressed this head-on, announcing that the new brand positioning and advertising campaign would be more “confident and bold.”
But is it enough? How much of a difference will the brand refresh really make to Waitrose sales, can it make the brand feel more ‘relevant’ and ‘compelling’ to consumers… and – crucially – can the grocer turn things round by Christmas?
The ‘Food To Feel Good About’ Campaign
So what exactly does Waitrose’s new look entail? The new brand proposition – and accompanying advertising campaign – was developed internally, using data from Waitrose’s customer strategy which features insights from over 4,000 target shoppers and staff.
It is part of the supermarket’s wider plan to highlight its high quality, taste and sourcing credentials in a bid to redress the balance as its customers reduce basket spend by as much as 18% as they focus on value.
CEO James Bailey admitted the supermarket’s brand positioning was “long overdue” a refresh, although he noted that the ‘Food to Feel Good About’ campaign would not be a dramatic change and would instead aim to make the business “more confident and bold” in what it offers customers. He also said it would be “a bit more challenging and provocative in the market”.
“Customers have been managing spend in lots of different ways, and that’s the beauty of being a supermarket as you can offer all those options,” he said.
The 60-second advert asks a series of questions about a range of Waitrose products – including Wookey Hole cheddar and hand-stretched pizzas – designed to deliver the best possible quality. The advert itself states that: “when we ask more questions, we get better answers”.
Waitrose customer director Martin George said: “We wanted to create a fully integrated campaign to bring together the quality, taste, ethics and value our customers can feel good about.
“With customers becoming increasingly discerning about where they spend their money, our ambition is to ensure that our brand refresh will help to make Waitrose feel more relevant and more compelling for our customers.”
A Christmas comeback
With food inflation now forecast to peak in the final quarter of 2022 and the first quarter of 2023, it’s widely agreed that Waitrose will need a strong Christmas to compensate for losses caused as a result of the cost-of-living crisis.
“No doubt Waitrose will have one of the most compelling Christmas ranges, with great private label innovation,” says retail consultancy firm IPLC partner, Paul Stainton.
“But I’m not sure this will turn their performance around as pricing will still be the key purchasing factor in customers’ minds.”
Stainton is not hugely impressed with the new Food To Feel Good campaign, describing it as “simply more of what the likes of Waitrose and M&S have served up in the past – nothing that new, and not compelling enough to turn the sales loss around in this economic climate”.
However, Waitrose does focus on its Essentials range at one point in the new ad campaign and mentions its ‘value range’ in the narrative. Could this help give a boost to the business?
Stainton says it’s unlikely, pointing out that the Waitrose Essentials range is “less of a ‘value-tier private label’ range – such as Asda’s Just Essentials – and more of a standard-tier private label range”.
When is a value range really a value range?
While Waitrose is clearly suffering as consumers look elsewhere to save money, the value tier within its own label offering continues to grow at a rapid pace. Sales are up 33% in the last four weeks and 70% of baskets now contain at least one Essential Waitrose product.
However, it’s also true that the Essential Waitrose ranges isn’t comparable from a value perspective.
Waitrose Essentials medium sliced white bread is over double the price of Aldi’s value tier equivalent (75p vs 36p) and it’s a similar story across the rest of the offering.
Whether that will matter to the supermarket’s largely middle-class customer base is another matter entirely. The perception of saving money is often enough and so it’s likely that – while Waitrose shoppers will continue to show up – they will increasingly make the shift from premium ranges to everyday, in terms of both range and pricing.
Breaking it down further, 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… has come at a cost”, adding that relaunches and new campaigns are coming “too late in the game”.
Value or values?
“Waitrose customers typically have a bigger cushion against inflationary pressures, so while other supermarkets have been moving to emphasise budget consciousness, Waitrose has the quality’ segment more to itself,” head of marketing and reptutation at Henley Business School, Professor Adrian Palmer said.
“There has been evidence about individuals’ changes of values during lockdowns,” he continues, pointing out that this aligns closely with the Waitrose brand refresh.
Palmer also believes that “creativity, durability and responsibility” seem to have emerged as important values, although he does take care to point out that we do not yet know how enduring these will be.
“The emergence of ‘climate shaming’ and scepticism about ‘greenwashing’ may also provide a sound foundation for making the Waitrose brand refresh distinctive in years to come,” he adds.
In looking at what Waitrose needs to do to win customers over in the coming months, Waitrose executive director James Bailey has clearly ruled out any possible compromise on quality as a way to lower prices.
He pointed out instead that the supermarket needs to communicate better with customers around its products, highlighting their quality, ethics and credentials – which is where the Food To Feel Good About campaign comes into play.
“Quality is a red line for us,” he said. “We can only ever be successful in the market by being the best version of ourselves we can be.”
Whether that will be compelling enough for customers facing an increasingly difficult winter as living costs continue to climb is unclear – but at least the supermarket is now starting to make some noise.
