Increased interest in food quality and origin is boosting sales for Waitrose, enabling it to outperform every food and drink retailer bar Tesco, according to City analysts.
The verdict flies in the face of the popular belief that price is the major driver for where people shop.
Irrespective of its acquisition of 19 Safeway stores in March and new store openings, Waitrose’s half-year like-for-like sales showed impressive growth of 4.4% - well ahead of the food and drink retail market, which is registering 2% growth.
Waitrose announced overall sales growth of 18.4% in the 26 weeks to July 30. Sales in the last week under review were up by 11.6% to £54.96m. Best-performing areas included Southampton, Caversham, Huntingdon and Wandsworth.
“Taking out Tesco, but including Safeway and Morrisons, food sales are declining,” said one analyst. “Given these trends, I would say Waitrose’s performance is the second best in the market behind Tesco.”
He said Waitrose had blazed a trail for other retailers by effectively advertising and delivering quality and service, while not scrimping on ranging. In some ways, he said, Marks and Spencer, which had sought
to put across similar messages, had been left trailing by Waitrose’s strong communication of its values. He added that its acquisition of the Safeway stores was paying off. And he said it was threatening to draw shoppers away from Tesco and Sainsbury. “The top end of the Tesco and Sainsbury shopping market would be happy to do their main shop at Waitrose.” Reece Williams, analyst at Seymour Pierce, said: “Waitrose has a strong customer offer and a loyal customer base. Its price/quality differentiation is where it can make ground.”
A Waitrose spokeswoman said: “We aim to be the first choice for quality food. We also aim to differentiate ourselves around the service we provide.”
Meanwhile, the retailer has announced the acquisition of five more Safeway stores from Morrisons - subject to clearance by the OFT - in Durham, East Grinstead, Lewes, St Katherine’s Dock in London and Wilmslow. Together with new stores, they will take the total of Waitrose outlets to 173 by the year-end.