Waitrose warns 'free coffee' scheme could hit profits

Free coffee loyalty card sparked controversy after some customers argued that it attracted 'wrong' kind of shopper

Waitrose Stratford Ciity,, London

Waitrose’s decision to hand out free coffee and newspapers to loyalty card holders will see profits fall at the supermarket, its directors have warned.

The warning comes discounter Aldi has overtaken the John Lewis Partnership grocer as the UK’s sixth biggest supermarket for the first time in the 12 weeks to 19 July, according to data from Nielsen.

Waitrose has benefited from the changed to shoppers’ habits, with a polarisation between upmarket and discount shoppers, as both Aldi and Lidl, and Waitrose and Marks & Spencer take food shoppers away from the traditional Big Four of Tesco, Sainsbury’s, Asda and Morrisons.

Mark Price, Waitrose’s managing director, said: “As you know, we are in a period of unprecedented investment and this will have an impact on the profit we report next month.”

He added that there had been “substantial investment” in its myWaitrose card which gives users a free coffee, leading to some customers suggesting it is attracting the “wrong” kind of shopper to the stores. Others have said the deal is leaving nearby independent coffee shops struggling.

The strategy has seen a boost in sales at Waitrose, which were up around 4.5 per cent, however, interim results due to be released on September 11 is expected to show profits falling. The company is employee-owned and any fall in profits will mean fall in bonus for staff at the end of the financial year.