As the John Lewis Partnership announced its six-month financials this morning, its senior management team insisted price matching and its unique Pick Your Own promotions scheme were not hitting profits.
Waitrose launched Pick Your Own in June, allowing myWaitrose card customers to choose 10 items from a list of about 1,250 to buy at a 20% discount.
Experts warned at the time the scheme could prove expensive for Waitrose, but MD Mark Price today said PYO had not affected the retailer’s profit.
“We have offset the loss from these discounts by an increase in sales – margins have not declined,” he told The Grocer. “It’s proved very popular with customers.”
Waitrose said earlier this week more than 700,000 customers had signed up to PYO so far, and added a further 250 items to be included in the scheme.
Waitrose also offers brand price matching with Tesco and – on its Essential range – with Sainsbury’s. Despite the current supermarket price war, Price again insisted matching prices with its rivals had not hit profitability. “Again, we’ve grown customers, sales and transactions – we’re really happy with the path we are on,” he said.
Across the John Lewis Partnership, profit before tax and exceptional items – including the company’s bonus scheme and property contributions – fell £33.8m to £96m.
But underlying profit (excluding exceptional items) at Waitrose was up, rising 0.6% year on year to £0.8m – a fact Price was keen to emphasise. “One analyst said this morning that these numbers were in ‘nose bleed’ territory”, he said.
Asked about how Waitrose planned to respond to the current difficult trading environment in grocery, Price said: “I could spend an entire morning on that question,” but added it was “enacting a fundamental change” across its grocery business.
“And we are doing a number of things towards this end: we’re becoming more efficient and changing our model to deal better with shoppers looking for convenience with added food to go ranges and cafes. We’ve also introduced broader services to give more choice outside of grocery, including foreign exchange offices in stores, a growth in our dry-cleaning services, and increasing our online focus.
“We’ve made a heavy investment in the past two years towards these changes, but I think that effort is now really starting to show through, and I think the increase in Waitrose customers [up 7% in the first six months compared to last year] tells that story.”