Waitrose's bid for global expansion will mean cheaper prices in its stores back in the UK, MD Mark Price claimed this week.
The retailer plans to open 20 Waitroses in the United Arab Emirates by 2010 - with three in Dubai set to be up and running by the autumn - under a licensing deal with local retailer Spinneys Dubai. It will be the first time the Waitrose fascia has been seen outside Britain.
Economies of scale achieved by expanding abroad would enable the chain to keep UK prices lower, said Price. "This deal will enable us to build volumes and provide better value in Britain. Anything that helps us grow volumes is bound to lead to better terms."
Waitrose already exports its products to stores in 23 countries, including a Spinneys outlet in Dubai that will be converted to the Waitrose fascia by April. Two further purpose-built stores in Dubai are set to open in July and October. Typical store size will be 25,000 sq ft.
Price said Waitrose had chosen to start its international drive in the Gulf mainly because it was home to a large British expat community - but also because the company believed its brand would go down well with affluent locals.
"Tastes among the Arabian population are quite westernised," he said. "Many of them have second homes in the UK, so Waitrose is well known to them. The Waitrose brand sells particularly well in Dubai."
Price said Waitrose was yet to decide which markets it might expand into next, but admitted it had "aspirations" in India and China. It already has supply arrangements in those countries - with Hypercity and Park 'N Shop, respectively. Any further deals abroad would be based on the franchise principle of the Dubai deal. "We are taking the low-risk approach of exporting products and licensing our brand. That way the partner takes the primary risk."
Waitrose will export ambient, frozen and chilled, including ready meals, to the new stores while short shelf-life products such as fresh produce, meat and dairy will be sourced locally. Price said Waitrose may establish more local supply as the business was scaled up in the region.Robust outlook for food
Mark Price was upbeat this week about Waitrose's performance over the festive period. "We had a strong Christmas, with sales up just over 7% in the seven days before Christmas Day and like-for-likes up 5.7%," he said.
The new John Lewis Food Hall in London was trading "fantasically", he added. "It is 10% ahead of budget, and in the two weeks before Christmas it was trading 40% ahead of budget."
Price said he was not concerned by gloomy predictions for the economy.
"I do think the market will be tighter, but it will hit homewares and fashion before it hits food, so it will be tougher on the grocers who are focused on general merchandise. In food, people will trade out of restaurants and into premium products to eat at home."