Waitrose to test foreign markets with far-flung franchise partners

Supermarket chain to capitalise on expat communities in South Africa, Australia and the Far East

Waitrose is to try its luck with new franchised stores in South Africa, Australia and the Far East.

The supermarket chain has begun talks with potential partners about franchising after a successful export business to these regions.

Waitrose already has two stores in Dubai in partnership with Spinneys, a Dubai-based retailer. It opened its first franchised store in Bahrain last week, as well as a company-owned shop in the Channel Islands – in St Saviour, Jersey – the first of five stores that it is opening on the islands.

Nigel Keen, the head of development at Waitrose, said: "In many areas where there is an expat population there is an understanding of our brand. The export of our products to many countries has shown that our brand could be successful.

"The franchise model is the best route for expansion into countries which are a distance away from us," Mr Keen said. "Working with a partner that understands the local area is important."

In the longer term, Waitrose could also look at Europe, with France as the most likely option for new stores. At the same time, it is still growing its export business and will begin to sell to Canada this year.

Overseas expansion is a big departure for the grocer, which is run by Mark Price and is part of the John Lewis Partnership – an employee-ownedfirm where the staff share in the profits. The group is looking at how to expand overseas and John Lewis confirmed last week that it will launch a website this summer to sell products in Europe.

Jonathan de Mello, a retail adviser at property agent CB Richard Ellis, said: "Waitrose is a quintessentially English brand but the UK grocery market is competitive. In these new territories it will be able to cherry-pick locations to find the correct demographic. Exporting product means it has already tested these markets."

The overseas expansion is on top of a big growth plan in the UK.

Mr Keen said: "Sixty per cent of our customers don't have access to a store. We are planning to open 10 supermarkets and 25 to 30 convenience stores this year. This isn't on the scale of the larger supermarket chains, but for us this is a grand scale of openings."

The partnership's plan in Britain suffered in the recession. Since 2008, many retail developments have been shelved, leaving John Lewis's pipeline of new stores drained. It devised a plan to open smaller stores on retail parks – called John Lewis at Home, a homewares and electricals chain – and has opened four stores with four more agreed. But high rents in many of the best locations mean expansion is not straightforward, and there's a strategy review this month. It is also looking at an option to open a full-range department store at Westfield London.

Waitrose's British expansion plans are also challenged by the coalition's new planning policy. Mr Keen said: "There is a lack of certainty surrounding the Localism Bill on planning."