>>THE ISSUES THAT MATTER, FROM THE PEOPLE INVOLVED
I heard an interesting tale the other day about how Tesco’s Sir Terry Leahy called a meeting recently with his trading teams. As they trooped into the room, they saw the table was covered with products from Waitrose; the sort of products that consumers could not buy in Tesco.
It could be apocryphal, but I suspect it’s true. Anyway, I am told that a bollocking ensued as Sir Terry made sure his buyers remembered Tesco’s success is due entirely to an amazing ability to stretch its brand so that it appeals simultaneously to the bottom and the top end of the market - and all points in between.
That’s why, at the back of last year, those same buyers were being told to make damn sure they left no room for the hard discounters to manoeuvre in. The discounters were making lots of noise about their product ranges, opening more stores and their sales were nudging up. Sir Terry and his team were having none of it. The word went out: we’re gunning for the discounters.
Tesco’s ruthless ability to pull off this ‘everyman’ retail strategy, particularly in a polarising, deflationary food market, was borne out again this week as the retailer unveiled a sparkling set of half-year figures.
And then Waitrose popped up with some equally amazing figures. Double-digit sales and profit growth, and 4.4% like-for-like growth, show the appeal of the Waitrose brand at the top end of the market.
What’s fascinating is that the top end is growing in size: some clever analysis of the market by IGD suggests that 58% of consumers can be described as ‘foodies’ who have an interest in factors such as variety, quality, provenance and ethical products.
Little wonder Sir Terry is keen to make sure Tesco keeps building sales by offering products that will appeal to the foodies. And as Waitrose keeps building its brand profile and presence across the country, you can bet that, like the hard discounters, it will find itself increasingly appearing in Sir Terry’s sights.
The trick is making sure that it just keeps on doing what it does better than the likes of Tesco. In many ways, developing, sourcing and selling food that is truly top quality is much harder to do than selling cheap food. In that respect, companies like Waitrose will always find plenty of room for manoeuvre. No matter how many bollockings Tesco’s buyers get.
room for manoeuvre