Waitrose managing director Steven Esom last week posted yet another impressive set of results as the supermarket continues to go from strength to strength. Total sales are up 11% to just short of £1.8bn for the half year, thanks to accelerated growth in its like-for-like sales, which are up 5% on last year to 5.3%.
All the signs are for more good times ahead. Pre-tax profits may have only risen by 1% to £108m, but this was against a backdrop of rent, rates and utility price hikes, as well as higher pre-opening and re-organisation spend. In addition, gross margins edged up slightly against last year, despite its year-long "double figure millions" investment in price.
The New Lower Prices campaign has been well-communicated over the past year, says Esom. But, he insists, it does not represent a change in direction towards a more pure price-driven strategy.
"Where there is a quality advantage we will premium price, but you have to be there on KVIs and continue to mirror the market place. Everyone wants to be treated fairly," he adds.
With sharpened pricing and rivals muscling in on the 'green' scene, some have suggested that Waitrose is at risk of losing its USP - a suggestion Esom disputes.
Where companies such as Sainsbury's have decided to rationalise ranges, Waitrose will maintain and promote deeper ranging, he says. "If choice and variety are stripped out then we add them back into the market. Customers are looking for variety and if a supermarket doesn't provide it then they will find someone that does."
He adds that in olives and olive oil, Waitrose has traded three to four times over its market share due to its breadth of choice. Likewise, in organics, says Esom,
it is trading four times over its share of the market at 17%, with sales up 16% on last year.
When it comes to core strengths such as organics and local sourcing, he claims not to be afraid of the competition. Initiatives such as Asda's sourcing hubs and Tesco's new regional buying offices have been making headlines with new local food initiatives, but, says Esom: "Competition just doesn't exist in that way."
Nor is he worried about the entry of US chain Whole Foods Market early next year.
The organic retailer's first foray outside North America will bring variety to the London scene, believes Esom. Although it will be competing at the top end of the market, it will be a good thing as it will raise awareness of the quality organic market, he argues.
Waitrose's entry into Scotland this year, following its acquisition of two Edinburgh stores from Somerfield in March, has been a hit with locals, trading 30% above expectations, he says. Glasgow is top of the list for the next site, but that could be 18 months off. Nonetheless, trials of a local hub in Scotland, giving suppliers one drop off point for store deliveries, are proving successful and have potential for roll out, he adds.
By the end of this year, Esom will have opened a further six shops, taking the total number of Waitrose stores to 183 - ten more than it anticipated. Next year, fewer stores are planned to open, with a target of 190 for the year end.
Looking ahead, Esom would like to grow the Food & Home format, but it looks set to remain at five stores for the time being due to a lack of suitable sites.
Working with rivals will also play a more important role, adds Esom: "There are areas where we compete, but for some things we should take an industry view. Labelling is one area where we should all co-operate." n