| SWINDON, England
SWINDON, England May 2 Upmarket British grocer
Waitrose is having to deal with a knock-on impact from the rapid
rise of discount chains Aldi and Lidl, as it is forced to
respond to price cuts taken by the country's big four
supermarkets to combat them, it said on Friday.
British consumers are shopping around to save money and are
wasting less, shying away from big weekly shops and buying
little and often in local convenience stores or online.
The grocery market is polarising with the big four - market
leader Tesco, Sainsbury's, Wal-Mart's
Asda and Morrisons - being squeezed between German
discounters Aldi and Lidl and upmarket
players Waitrose and Marks & Spencer.
Tesco, Asda and Morrisons have been cutting prices to try to
combat the discounters, with Morrisons firing the latest salvo
on Thursday with reductions averaging 17 percent on 1,200
Analysts have expressed concern about a possible contagion
of price cuts hitting margins and earnings across the industry.
"We're not losing any of our gold customers to Aldi or Lidl.
There's a tiny bit of migration from our silver and bronze -
you're talking about a couple of million tops," said Waitrose
Managing Director Mark Price, signalling those customers might
occasionally also shop at the discounters.
"It is more about how we respond to Sainsbury's and Tesco in
terms of what they do with pricing," he said on a media and
analyst visit to a new Waitrose store in Swindon, south west
He noted that Waitrose, part of the employee-owned John
Lewis Partnership, matches Tesco prices on 8,500
branded lines through its "Brand Price Match" scheme and kept a
close eye on own-label pricing at both Tesco and Sainsbury's,
recently joining in with industry-wide cuts on basic products
such as milk and butter.
It also differentiated its offer with initiatives like free
coffee and tea and newspapers for holders of its loyalty card.
"What we will make sure is that on key value items Waitrose
continues to be price competitive ... Thankfully we've got a
great margin to play with so we feel that we're in a pretty
resilient position in terms of what people do," he said.
Waitrose's strategy was working, said Price, evidenced by a
6.5 percent rise in first-quarter sales, reported earlier on
After Aldi and Lidl, the over 300-store Waitrose is the UK's
fastest-growing grocer and, according to market researcher
Kantar Worldpanel, currently has a record market share of 5
percent, making it the country's sixth largest.
"We're going to be everything that the discounters aren't,"
He highlighted the discounters' limited product range -
1,500 lines versus nearly 25,000 at Waitrose and initiatives
being showcased at the Swindon store, such as new bakery and
patisserie counters, juice bars, deli and wine-tasting areas.
The store is also doing trials on new technology, including
smartphone product scanning and payment.
"We have embraced technology, both in terms of what it can
do to drive the efficiency of our operation but also how it can
improve the customer experience. Again something that
discounters are never going to do," added Price.
(Editing by Mark Potter)