Waitrose launches in Dubai

Retailers across the country failed to ring in the New Year or a great deal else on their cash registers as consumers tightened their purse strings going into an economic slowdown. But as a host of brands cast a long shadow over the sector with their bleak Christmas trading updates, one retailer, the John Lewis Partnership, stood out from the crowd.

Retailers across the country failed to ring in the New Year – or a great deal else – on their cash registers as consumers tightened their purse strings going into an economic slowdown. But as a host of brands cast a long shadow over the sector with their bleak Christmas trading updates, one retailer, the John Lewis Partnership, stood out from the crowd.

It is preparing to export its fast-expanding food arm Waitrose overseas as part of an ambitious expansion plan.
Waitrose’s “Quality food honestly priced” strapline will appear abroad for the first time after the supermarket chain signed a deal with Dubai-based Spinneys. The first store opens in Dubai in April, with a licensing agreement to open more than 20 sites in the United Arab Emirates by 2010. And with Christmas sales reportedly up by 28.5%, Waitrose says it is ready to shift into the next gear in a bid to double the size of the group over the next decade.

Retail experts feel that Waitrose’s reputation for quality will help it to implement its expansion drive and export its brand ethos to the large expatriate population in countries such as Dubai. Verdict Research consulting director Neil Saunders says: “The brand has a premium positioning and a clear set of well-recognised propositions, including great service, quality food and an array of ethical credentials, all of which can easily be transported to anywhere in the world where consumers like and enjoy good produce.”

Beattie McGuinness Bungay partner Andrew McGuiness agrees, adding: “It has built its brand on the freshness and provenance of its food, which are all very exportable values.”

But some are concerned that the overseas expansion comes at a time when Waitrose should be concentrating on domestic challenges, such as increasing competition from the Big Four UK retailers who have been bolstering their own premium food ranges.

Saunders believes there is less of a distance between mainstream retailers and Waitrose than there used to be, as its rivals continue to “invade” its space. Price-led retailer Morrisons, for instance, has also started lending its support to sustainable fishing and farming. Saunders adds: “The key will be to manage both the domestic and foreign markets, without losing sight of one or the other. It will be a huge challenge to take its tried and tested brand ethos to other markets.”

Maureen Johnson, chief executive of The Store, WPP’s retail consultancy, says that she was surprised when the move to expand overseas was announced last week: “Waitrose has massive opportunities in the domestic market and to instead look abroad for further expansion does not seem to be the obvious thing to do.”

According to Verdict Research, Waitrose has 3.2% of the UK grocery market, up from 2.5% in 2000. Saunders says: “It is nowhere near saturation point like Tesco, Sainsbury’s or even Asda, and therefore has huge potential to grow.”
Waitrose buying director Richard Hodgson says that the expansion plans are not as radical a step as is being made out. He adds: “We have been exporting Waitrose-branded produce to more than 20 countries and have been trading with Spinneys for four years. And as a retailer Spinneys also prides itself on its quality and customer service, and therefore it is a very low-risk strategy to rebrand its stores as Waitrose.”

Hodgson says that the retailer is getting ready to announce similar deals in the next 12 months in India and possibly the US. But he rules out the Chinese market “for the time being”.

Johnson warns: “I worry about it growing abroad, too fast, too quickly.” She adds that part of Waitrose’s charm has been its “specialism” and the fact that it can sometimes be the “occasion shop” for consumers “adds to its virtues”.
Some question whether Waitrose’s values can be transferred to all cultures outside the UK, and Johnson thinks it needs to continue to focus on the domestic market and to promote its aspirational qualities.

Hodgson admits it is a challenging time in the “fiercely competitive” UK food retailing sector but he adds that as a business its intentions are to grow, which is why it is looking for growth both in the UK and outside. “We are clear how to achieve demand and continue to look at every opportunity to grow,” he adds. “Waitrose has had an amazing amount of requests from international retailers wanting to do licensing deals with us, but we are also aware that there are many affluent catchment areas in the UK where we do not have presence and we will be addressing that.”

Hodgson, who joined Waitrose from Asda last year and is the supermarket’s top marketer, recently reappointed Miles Calcraft Briginshaw Duffy to handle its £26m advertising business. He says that he is pledging a 50% increase
in advertising spend this year and adds: “It is almost surprising to realise that we continue to be an unknown quantity to many people in the UK and I intend to generate a huge brand interest in Waitrose.”

McGuinness believes its new advertising will need to welcome the “growing generation of foodies” and become more inclusive with a broader appeal. The retailer says that it now believes that “more people” should have access to the Waitrose brand and that the new advertising will broaden its charm.

Hodgson, however, laughs at the suggestion that the retailer is still run by a “twin-set and pearls brigade”, which some claim could limit the success of its expansion plans. He says: “Our private ownership structure does not make us conservative in any way, but because it allows the staff to share the profits it gears us towards success like no other.”

Saunders points out that the “once-seen-to-be” conservative Waitrose is now run by “extremely ambitious” managing director Mark Price, who has surrounded himself with other ambitious marketers, including Hodgson. Saunders adds: “Waitrose has hardly ever put a foot wrong and under Price I can see huge and successful plans for the brand both in the UK and abroad.”

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