Waitrose is ramping up its convenience offering over the coming year, after reporting that online grocery sales dropped by 27% – a loss of £234m – while branch sales remained flat.
The upmarket retailer is investing in smaller stores and “increasing its presence in the convenience market” after seeing Covid-19 shopping behaviours unwind at the same time that consumer confidence dropped to record lows.
The grocer’s overall sales dropped 3% in the full year to 28 January as a direct result of the ecommerce decline, which had previously more than tripled in size from 2019/20 to 2021/22.
John Lewis Partnership chair Sharon White attributed the drop in Waitrose sales to the “big online growth” of the pandemic years beginning to “unwind” as ecommerce continues normalising.
Online sales accounted for 17% of Waitrose business in 2021 but dropped to 14% last year – although this remained up on pre-pandemic levels. This drop “contributed “significantly” to the supermarket’s movement in market share during the year which saw it drop to 4.7%.
Looking to step up its business in other ways, Waitrose is expanding its convenience offerings, rolling out food halls to 50 Dobbies Garden Centre branches by May, offering customers a range of high-quality food, grocery products and everyday essentials.
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Last year Waitrose also began supplying 13 convenience stores in Scotland and Jersey, and opened 11 new Waitrose shops at Shell forecourts, taking the total to 80. It plans to open more this financial year.
Executive director James Bailey said today (16 March), that there is also “an opportunity for the brand in expanding the number of little Waitrose stores”.
As part of its convenience offering, the grocery retailer has also stepped up its partnership with Deliveroo which is now available in 222 shops with 2,500 products, and has seen orders up 33% year on year.
Although the supermarket saw a rise in customers of 7% to 13.7 million, basket sizes were down by 15% last year and sales volumes were down 10%.
White attributed this in part to the fact that “shoppers shifted some of their grocery spending to the discounters.”
Speaking of changing consumer shopping habits, Bailey said that “contrary to popular belief, Waitrose customers are very similar to everyone else’s customers so they’re not immune to the challenges of inflation.”
However he added: “If you look at the Kantar numbers, most supermarkets last year have seen some of their customers shopping on a budget, and sometimes that involves shopping in discounters. So I don’t think we are more or less exposed than does anyone else.”
Looking ahead to ensure its customers don’t continue to switch to discounters and to improve its online sales, Waitrose has begun making a series of process improvements, including changes to night shift processes to improve pick rate productivity for online orders, helping customers receive less substitutions.
