Waitrose wises up to Nineties values

Supermarket chain Waitrose has trebled its profits over the past five years and increased its sales by 50 per cent. But it has done so without the sort of ad budgets of Tesco, Sainsbury’s and Safeway, which each spend more than 20m a year on TV branding campaigns.

Waitrose has shelled out a meagre 1.5m annually on a few tactical press ads through its incumbent for four years, LLS Jaffe Keating.

But the 117-store chain is to launch a new press, magazine and poster advertising campaign this week. The campaign, through agency Banks Hoggins O’Shea, which won the 4m full-service account last Christmas, will run on posters and in magazines such as She, Marie Claire, the Mail on Sunday’s You and Daily Mail’s Weekend.

Even without the big brand advertising of its more aggressive rivals, the supermarket of choice for upmarket southern shoppers has cultivated a separateness, pointedly keeping out of the pricing, image and acquisition wars raging between the big three.

Nonetheless it is experiencing what Verdict analyst Clive Vaughan calls a “sales and profits renaissance”.

Profits for 1997/98 were 74.5m compared with 27m in 1993/94 on sales of 1.67bn, up 522m from 1.15bn in 1993/94.

But the fact that Waitrose only finished introducing electronic tills and ordering systems into its stores at the same time as it recognised the benefits of Sunday trading and longer opening hours – in 1995 – puts this profits boost into perspective.

Vaughan says: “Waitrose is on a roll. It went through a difficult period in the early Nineties not opening on Sundays when the others did. The other contributory factor is the South-east’s return to prosperity after being bombed out in the recession.”

But the key, says Vaughan, was the adoption of state-of-the-art supply and distribution systems, like electronic point-of-sale tills (Epos), enabling the company to keep better control over stock and replenishment with automated re-ordering.

Dragging a supermarket chain into the Nineties was a costly business. Waitrose was previously well-known for its reluctance to loosen the purse strings.

This conservative attitude stems from the historic background of Waitrose and its sister company the John Lewis Partnership: both feature a democratic but slow-moving structure, where employees become partners and share in the profits of the business. The bonus is not bad this year – 22 per cent of pay.

The requirements of modern operating practices have ushered in a more open-minded approach to expenditure Waitrose has always seen as a frippery – advertising.

Vaughan says there is a new dynamism: advertising was previously taboo. “It was seen as a waste of money, but now it is recognised that it is an investment that can bring a good return.”

Waitrose marketing director Mark Price is well placed to comment on the new mood. He is the company’s first marketing director, in the job for four months after working for 17 years in John Lewis department stores.

“We always had the view that the shops do the talking,” says Price. “But David Felwick (managing director) believes we should reach the whole audience with the Waitrose story and alter misconceptions.”

The misconception Price talks of is price. Waitrose is seen by shoppers as expensive, although he insists it is not: “We sell everyday products at the same price as everyone else. We would always put a price in an ad; we’ve nothing to hide.”

The Waitrose brand proposition of quality and value is already well-known to its shoppers. What the advertising has to do is convince them to buy a range of everyday goods along with the treats and top-ups.

“We are aiming to reinforce our value, competitive pricing and long-standing relationship with suppliers and current shoppers. Our goal is to increase customers and what they spend.”

Price says Waitrose and John Lewis remain careful about the way they advertise: “We continue to believe that word of mouth is by far the best means of advertising.

“Apart from loyal customers, a lot of people don’t know about Waitrose and the campaign will ensure the message gets through,” says Price. He shrugs off the need for loyalty cards.

A report by Corporate Intelligence on Retailing says: “Waitrose is a niche operator and can afford to be different. It is now trying to encourage its loyal customers to spend more rather than endeavouring to appeal to a broader audience.

“The brand image has been built on exclusivity and value rather than low prices and Waitrose has been careful not to devalue this image during the price skirmishes of recent years,” says the report.

And with a 1.8 per cent share of the grocery market – compared with Safeway’s 9.5 per cent – Waitrose’s size has enabled it to stick to its guns and refuse to compromise.

Vaughan believes it is not Waitrose which needs to be more like its rivals, but the opposite. “The opportunity for Safeway lies in becoming more like Waitrose, which is as unashamedly a premium retailer as Marks & Spencer is a quality one.”

Price denies any competitive reasons for breaking the campaign now. But rivals are very active, all the same.

M&S pushes its food stores through advertising. And other supermarket chains are improving their premium food ranges. Last week, for example, Waitrose’s claim that its range of 250 organic products is the most comprehensive of any supermarket was taken to task by Sainsbury’s, which claims it will offer 300 by mid-July.

For Waitrose to maintain the momentum that has driven profits over the past five years, it needs to protect its select appeal and fight off the competition muscling in on its exclusive positioning.

The ad campaign will attempt to reinforce Waitrose’s standing with existing customers who may be seduced by the likes of M&S and the big four’s improving product lines. These tentative steps into advertising could be followed by more brand building work as the profits-hike levels off.

Latest from Marketing Week

Marketoonist on PowerPoint pitches

The Marketoonist

Tom Fishburne is founder of Marketoon Studios. Follow his work at marketoonist.com or on Twitter @tomfishburne See more of the Marketoonist here Tom Fishburne will be speaking at the Festival of Marketing, which is taking place on 4 and 5 October at Tobacco Dock. To find out more information, including how to book tickets, visit […]

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

Register and receive the best content from the only title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we will be your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here