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If there’s any sign that Waitrose is finding its form again in catering to Britain’s middle class, it could be the alliance with Yotam Ottolenghi.
The retailer began stocking sauces, pastes and spice mixes from the party doyena in late April. Insiders say the pomegranate, rose and lemon harissa and miso pesto jars are selling well and have exceeded expectations.
The Ottolenghi mash-up came after Waitrose owner John Lewis Partnership announced it had returned to profit in the year to January after three years of heavy losses. This was largely due to the performance of Waitrose, which lifted sales by 5 per cent to £7.7bn. Department store John Lewis’ operations, on the other hand, suffered a 4 percent fall in sales to £4.8 billion.
Outgoing John Lewis chairman Dame Sharon White said in March that the company would now focus further on its retail offering by opening more Waitrose stores and refurbishing existing ones. This broad strategy appears to have been confirmed by the selection of White’s replacement – retail veteran Jason Tarry, who joins in September after spending 33 years at Tesco. But retail watchers will be looking for details on how Tarry, who is expected to have a hands-on role at John Lewis, will carry out the plan and how he will work with James Bailey, the divisional boss of Waitrose, and other executives.
Bailey, a former purchasing director at Sainsbury’s, joined in April 2020 just as the Covid-19 pandemic hit. Since then, it has experienced a stifling period in the UK’s highly competitive food arena, from which it is only now emerging.
As of 2020, its market share has fallen from 5 percent to 4.6 percent and is now just slightly ahead of Marks and Spencer. Rising inflation has caused some shoppers to trade down and look elsewhere for lower prices. Waitrose also underwent a painful separation from Ocado, the online supermarket that had been selling its products for almost two decades. Just as online shopping received a boost in the wake of the pandemic, Ocado abandoned it for the now resurgent M&S.
And last year Waitrose was plagued by technological problems. It also lacked the firepower to meaningfully invest in its operations or launch flash pricing actions during cost-of-living cuts, due to its unusual employee-owned structure, which limits its financial room to maneuver.
Waitrose said this year it planned to add to its 331 stores in underserved areas, its first expansion in about a decade, and refurbish 80 existing ones over the next three years. It’s a costly but necessary endeavor, with fierce competition for the limited space that could be profitable.
Some analysts also suggest that when Tarry arrives, he should work with Bailey to come up with a price matching scheme to boost Waitrose’s value. Both Tesco and Sainsbury’s have credited their initiative to price match discounter Aldi on hundreds of items to boost sales over the past few years.
“You wouldn’t be surprised if Tarry came and went, ‘We’ve had real success with Aldi at Tesco’. Waitrose may not have to match Aldi, but if they brought Sainsbury’s price match or M&S price match it would help,” said one industry observer.
But Richard Hyman, retail analyst at Thought Provoking Consulting, believes Waitrose should not try to be “all things to all people” and should instead rely on its luxury offering and prices.
Waitrose is also looking to deepen its relationship with its customers, as Tesco and Sainsbury’s have done with their loyalty programs. The group said last year it would launch the scheme this year, which will include John Lewis and Waitrose. The retail industry will also be watching to see if Waitrose will reintroduce a benefit similar to its free newspaper offer for loyalty cardholders, which was scrapped due to cost-cutting efforts, in 2022.
Tarry was instrumental in turning around Tesco after it was hit by an accounting scandal in 2014. Hyman says he hopes Tarry can do something similar at John Lewis and Waitrose. But he says Tesco’s culture is very different to that of the risk-averse Waitrose. Tarry will have to “get into the weeds” of retail operations. “It’s a huge career move,” says Hyman.
laura.onita@ft.com