Waitrose unveiled positive half-year results today (12 September), as its adjusted operating profit increased by £75m while gross margin rose by 1.2 percentage points.
John Lewis Partnership chief executive officer Nish Kankiwala said its robust half-year results “confirm” that its transformation plan for the group is working, and it expects profits to grow “significantly” for the full year.
We look at how Waitrose is looking to build on this growth and what the supermarket giant is planning next.
Winning new shoppers
The upmarket grocer said its half-year profit increase, was in part, driven by customer growth.
According to Waitrose executive director James Bailey, the supermarket has now had 10 consecutive quarters of customer growth, equating to nearly two million more people shopping with at the supermarket, than it had two years ago.
Kantar data revealed that Waitrose gained grocery market share for the first time in over two years in July, as it edged up 0.1 percentage points.
Bailey explains: “All of the growth is like for like from existing stores and online. We haven’t actually opened a new shop in over six years now.
He says that the customer growth has come from “lots of different places in the market”, including from “a number” of Waitrose’s competitors, as well as different eating occasions such as lunchtime.
“Our lunchtime trade is up quite strongly, our dinner for tonight trade and things like that. So it won’t always just be from competitors. It might just be about growing spend from our existing customers, but we’re seeing growth from most parts of the market at the moment.”
Kankiwala adds that “customers are responding well” to the grocer’s continued investment into quality, service and value, “with more people shopping with us and customer satisfaction increasing”.
Having “the best availability”
As well as customer growth, the retailer attributed its boost in profits to “record availability” of 96.5%.
This is an area that Waitrose has struggled with in the past and over the last year there have been a number of challenges affecting many in the grocery sector, including “challenging and disruptive” weather conditions which have impacted the livestock, arable and horticultural sectors.
However, Bailey says it is not seeing any interruptions in its supply chain right now.
“We’re in the best situation we’ve been in for many years around availability. As we launch into the autumn season, we do not see anything significant in the global macro arena that will affect our supply chain. So we expect to be fully up and running for Christmas with the biggest and best offer ever,” he says.
Improving customer satisfaction at the checkout and beyond
Bailey flagged that its improved performance had been “underpinned by significant improvements in customer satisfaction”.
“Our more efficient and flexible store operations have given us the chance to have more partners in store when our customers need them most,” he added.
In looking to improve customer satisfaction further, the grocer has vowed to “always offer customers choice” when it comes to how they buy their goods in stores.
While some supermarkets have been switching up their checkout offer, with Morrisons to scale back on self-service checkouts and Asda adding more employees to its manned tills, Bailey says that despite its plans to roll out a £1bn store expansion and revamp programme, Waitrose is “committed to always offering that choice”.
“We’re just coming to the end of a two year renewal programme for our self-checkouts and I’m really pleased to say that our customer satisfaction for that checkout experience has significantly improved as a result. So we’re pretty pleased with the progress we’ve made.”
Growing and revamping the store estate
John Barnes, Waitrose & Partners
Waitrose may have not opened new stores for six years but that is soon to change as it plans to launch 100 new convenience shops in next five years.
The first of the new Little Waitrose stores is to open in the next couple of months at Hampton Hill in south west London, according to Bailey.
Meanwhile, it is also revamping its existing stores. Last month, it embarked on the next phase of its store modernisation programme with the refurbishment of its Finchley Road store, which Bailey says is “performing well ahead of our expectations”.
It houses a number of new and refreshed features, including a fully updated refrigeration system, the first fully chilled beer, wine and spirits department, and a new look and feel bakery.
It also has a dedicated made-in-branch baguette station, a hot chicken and salad counter, a dedicated parmesan bay, and a hot wok counter that will serve ready-to-go meals to customers.
A further eight branches are set to be refurbished in the second half of 2024, as part of a wider plan to improve 150 existing sites.
GlobalData retail analyst Aliyah Siddika says: “This investment will support it in competing with close rival M&S, which has refurbished its stores to have a sleek and modern look. Additionally, Waitrose is capitalising on the convenience store trend by committing to opening 100 new locations over the next five years, allowing it to cater to the rise of top-up shopping.”
As Waitrose pushes ahead with its plans to revamp stores, win more shoppers and improve availability, the grocer has a healthy appetite for growth.
