Waitrose targets 300 convenience stores
Waitrose and Alliance Boots to cross-sell products in 'significant' move
Friday 25 September 2009
Waitrose has signalled its intention to become a major force in the convenience store market, and unveiled a partnership with the health and beauty giant Alliance Boots to cross-sell products in each other's stores.
The 215-store grocer is to take on Sainsbury's and Tesco by opening convenience stores, sized between 2,000 sq ft and 4,000 sq ft, after a trial of two larger formats in Bristol and Nottingham over the past nine months.
Mark Price, the managing director of Waitrose, said the grocer could open 300 convenience stores over the next five to 10 years, depending on the success of the trial. "The smaller shops will allow Waitrose to penetrate catchments that it [currently] can't," he said.
The convenience store roll-out is the latest in a series of expansion initiatives unveiled by Waitrose, which is the UK's fastest-growing supermarket. This year, it has already launched a value range, Essentials, opened its first store inside a Welcome Break service station, and earlier this month acquired the exclusive rights to the Duchy Originals brand, the upmarket food range founded by the Prince of Wales.
Mr Price said: "Our ambition was to make sure Waitrose was the top quality grocer, but to do this we had to have a broader appeal. What you are starting to see in last six months is the implementation of a strategy we have been working on for much longer." Last week, Waitrose, which is owned by the John Lewis Partnership, delivered record operating profits, before exceptional items, up by 20.1 per cent to £127.8m for the half-year to 1 August, boosted by Essentials, increased store openings and a 1.8 per cent rise in like-for-like sales.
After opening two motorway service shops, as part of a franchise agreement with Welcome Break, Waitrose yesterday said it would roll out a further nine shops over the next eight months, and additional stores are on the agenda. The grocer said the two shops, on the M40 at Oxford and the A1-M25 at South Mimms, which have created 50 jobs, had made a "big impact" and had reached up to nine million motorists.
The grocer said it would provide further details of its product partnership with Alliance Boots later in the year, but they are discussing the trial of certain product ranges in each other's stores. While Waitrose will supply the high street chemist with a range of food, Alliance Boots will provide the grocer with healthcare and well-being ranges. Mr Price said: "Potentially, it is very, very significant working with Boots." It is likely to include a lunchtime offer of sandwiches, wraps and sushi, but he declined to comment on this.
Both retailers are already working on rebranding the Boots UK-owned pharmacies in 13 Waitrose stores to Boots Pharmacy.
While the launch of the Essential Waitrose value range had delivered a huge boost to the grocer since launching in March, Mr Price said that the supermarket chain had substantially sharpened up its pricing. Based on its tracking of 1,200 lines, Waitrose said it is now only 3.8 per cent more expensive than Sainsbury's, compared to between 8 and 9 per cent two years ago.
"We have significantly increased the amount of promotions," said Mr Price. For the 12 weeks to 6 September, Waitrose posted sales growth of 11.2 per cent, which outstripped Morrisons' 9.3 per cent, Asda's 7.8 per cent, Sainsbury's 7 per cent and Tesco's 4.6 per cent, according to TNS Worldpanel.
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