Speaking on a call this morning (11 September) following the announcement of its half yearly results, Price said the scheme is helping to create a “more modern” Waitrose that has a much better understanding of its customers for a much lower cost than rivals’ schemes. He said food retailers’ loyalty schemes usually give back around 1 per cent of the cost of shopping but claims myWaitrose costs less than 1 per cent of sales to run, giving it a better return on investment.
Price told Marketing Week that some 1 million per week now take advantage of the offer for a free cup of tea or coffee, and these people shop with Waitrose twice as much as they ordinarily would and buy more. Together with other marketing initiatives such as its increased focus on social media, content and sponsorships, myWaitrose is helping the supermarket think about its affinity and relationship with customer in a very different way to the rest of the market, he added.
“Waitrose always wants to be innovative, we are trying to change the nature of what a supermarket is in a different and changed world.
“Free coffee is loved and enjoyed by our customers and it is not a drain on our profits. This is just some water and crushed coffee beans. It is more than washing its face in terms of the loyalty we get and helping Waitrose transition to being about hospitality and looking after our customers in different ways,” he said.
The success of the scheme helped boost Waitrose sales for the half-year to 26 July, with sales at store open for more than a year up 1.3 per cent, outpacing the wider market. Total sales were up 4.1 per cent, driven by a 54 per cent increase in its online grocery business while shopper numbers increased by 6 per cent or 670,000.
However, Waitrose has been impacted by what Price calls “structural changes in the market”, namely the rise of online and convenience retail and big price cuts. The supermarket invested more than £200m in its business in the first half of the year, twice as much as last year and the most it has ever spent in a six-month period.
That led to a 9.4 per cent drop in profits to £145.2m. Price said the supermarket has spent £10m cutting the price of key items such as milk, butter and eggs alone and will continue to match the price of Tesco branded goods and Sainsbury’s own label in order to honour its commitment on price and make sure it stays competitive.
Sister brand John Lewis also outperformed the market, with like-for-like sales up 8.2 per cent and operating profit increasing by almost two-thirds to £56.3m. Its own loyalty scheme now has 1.2 million members, compared to Waitrose’s 4.8 million, and managing director Andy Street says early analysis points towards an increase in sales and visits for members.
Overall at the John Lewis Partnership, operating profit was up 53 per cent to £176.1m on the back of a six per cent rise in total sales. The retailer credits its improving omnichannel offering and success of click and collect for the rise.