Store partners see profits sinking in the suburbs: The Waitrose supermarket chain, grocer to the middle classes, has been hit by a fall in sales and a decision to shun Sunday opening

WEYBRIDGE, Beaconsfield, Dorking, Marlow, Wokingham, Godalming, Bromley . . . the roll-call of Waitrose supermarkets sounds like a journey through the leafy suburbs of the Home Counties. If ever a grocery chain has targeted the middle classes of the South-east, it is Waitrose.

Waitrose's recent fortunes have plunged as unnervingly as those of its white-collar customers. Its underlying sales are falling, its profits are down and its staff are fed up.

In some shops up to one-third of customers have deserted to rival superstores, tempted by keener prices, longer opening hours, quicker queues and the chance to shop on Sundays. While most supermarket chains now open seven days a week, Waitrose refuses to countenance the idea.

Waitrose is different. Founded in 1906 by Messrs Waite, Rose and Taylor, it was bought in 1937 by the John Lewis Partnership, Britain's biggest worker co-operative. John Lewis has no shareholders to please. Instead its 30,000 employees are 'partners'.

Stewart Hampson, chairman, this week warned staff: 'Let us not duck the issue: Waitrose is suffering from the combined effects of sales eroded by burgeoning competition, illegal Sunday trading . . . and the weight of capital investment in scanning and new distribution chain improvements.' Waitrose's profits fell to pounds 41.7m in the year to 30 January, its lowest for five years, on sales of pounds 1.15bn. He said that 'the short term carries the strain', a hint that the annual bonus may have to be cut again.

The bonus has been an important component of pay, rising to more than 20 per cent of annual salaries in the late 1980s, enough to finance an exotic holiday for the humblest shelf-filler. But it has fallen every year now for five years, sinking to a 33-year low of 8 per cent last year.

Mr Hampson says Waitrose is losing pounds 1m in sales every week because of Sunday opening by rivals. But other supermarket groups insist that Sunday opening is not the real cause of Waitrose's problems. Its underlying sales record over the past five years is one of the poorest in the industry. Privately they say Waitrose management has been sleepy and has under-invested in the business. According to one rival: 'It's full of ex-RAF officers and civil servants rather than entrepreneurial types.'

Only one of Waitrose's 103 supermarkets has scanning machines - which make pricing, stock control and automatic re-ordering more efficient - at the check-out.

Belatedly Waitrose has realised it needs to catch up and has earmarked pounds 20m to introduce scanning over the next two years. It is also investing in its two distribution centres.

It is also lengthening its opening hours. But again it has trailed its rivals, some stores extending their hours only last October. Customers complain about having to pay for parking in some town-centre stores where the car-parks are operated by local authorities.

No one at John Lewis would admit that paying record bonuses in the 1980s might have been a mistake, that the money should have been re-invested. But Waitrose is now looking weak - hamstrung by its inability to raise capital on the stock market and its unique constitution, which makes closing loss-making stores difficult.

Waitrose still has an unrivalled customer base and still equals the best in the business in one key measure of performance: sales per square foot.

But competition is intensifying. Bill Myers, food retailing analyst with the stockbrokers Henderson Crosthwaite, said: 'A possible solution is for John Lewis to think the unthinkable. At the moment Waitrose is exceedingly saleable but it will become less so as Sainsbury, Safeway, Tesco and Iceland step up the artillery barrage.'

John Lewis said the question did not arise: 'Waitrose is a first-class supermarket with a good future.' But hanging on could be a mistake, warned Mr Myers: in three to five years problems at Waitrose could be so severe as to threaten the entire John Lewis Partnership.

Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

IT Project Manager

Competitive: Clearwater People Solutions Ltd: Our client based in Chelmsford a...

Business Intelligence Specialist - work from home

£40000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

Business Intelligence Specialist - work from home

£40000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

IT Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London