Waitrose set to challenge in the UK grocery sector

With half-year sales of £2.18bn, up 7.4% and profits up more than 20% at £128m, Waitrose is a retail brand on the move. The company has come a long way in a short space of time, only last year it was tipped to become a victim of the credit crunch due to its premium positioning.

The successful launch of the Essentials range – now accounting for 16% sales – has made the brand more accessible, Mark Price, MD of Waitrose says, “We’re seeing weekly sales growth of 11%”.

Waitrose convenience store Nottingham

Geographical spread

With the brand achieving new relevance with consumers, Waitrose plans to expand its base out of the southeast by developing new sales channels.

Despite high growth, poor geographical coverage is hampering the brands ambition, “Our research shows that seven million people want Waitrose quality but can’t get it today where they live,” says Price.

Boots tie up

A tie up with Boots will give Waitrose access to hundreds of high street locations, potentially very quickly. The agreement will see Waitrose offer a selected range of food in Boots stores, in return Waitrose’s in-store pharmacy will be rebranded Boots.

New convenience

In the longer term, Waitrose are set to roll out their own convenience stores between 2,000 sq ft and 4,000 sq ft in size. Price is quoted as saying he hopes to open 300 stores over the next “five to ten years”.

New stores are expected to sell an edited range of mainly fresh food, providing customers with staples for top up, convenience shopping. In addition the company plans to increase the number of stores found at Welcome Break motorway service areas from two to eleven. A move that will help them gain exposure to middle England.

Double-digit growth

Price is positive that Waitrose can build momentum and continue to be the fastest growing grocery brand in the UK, “With continued strong performance from our existing stores and this move into the convenience market, we are planning for double-digit growth for the foreseeable future”.

“Trust” brands look to steal customers from high street banks

News this month highlights that recession creates opportunity on the high street for “trust” brands. Stefano Pessina, executive chairman and chief executive of Alliance Boots, owner of Boots the Chemist announced plans to split his role to focus on strategy, developing the Boots brand and increasing sales.

Brand development

Quoted in the FT, Pessina explained his reason for looking to develop and extend the brand, “We are in a market that is not growing by 20 per cent a year … and we have to add services; we have to be very active in order to offer more and more to customers and we have a lot of ideas. We are working on certain ideas.”

With Tesco planning to enter the financial services sector, speculation is, Boots will follow. Given the total breakdown in consumer confidence in the banking sector due to taxpayer bailouts, a culture of excess, and greed, consumer-centric retailers spot an opportunity to leverage the trust imbued within their brands.

Financial services loss of trust

Two recent surveys illustrate depth of problem for high street banks. Moodier Britain survey, published by McCann Erickson in November 08 (before extent of banking collapse was apparent), found that nearly 25% of respondents – total sample of 1028 adults – had no trust in banks.

More recently Readers Digest Trusted Brand Survey 2009 shows that across 16 European countries trust in banks has fallen 39% in 12 months, and 57% in the UK alone.

“Trust”, increasingly important in a down turn

It appears having no financial services experience is no longer a barrier to enter the sector. Banks have illustrated that expertise is no guarantee of expert performance. While Boots would be untested, they have demonstrated for decades that they can be trusted to look after the health of the family. These most simple values are set to challenge the current banking status quo as consumers turn their backs on organisations that appear to be uncaring and led by shareholder profit.

New players

In a recession “trust” will become more important as it guarantees loyalty and in turn sales. While banks try desperately to save their businesses and prove that they are no longer out of step with their consumers, new players are set to trial, improve, and then challenge their lofty position.

While there wasn’t a run on any UK banks, expect a run on their customers if the likes of Boots and Tesco decide to try and steal market share.