Tuesday, June 10, 2008

Small-Format Food Retailing Special Report: UK Upscale Supermarket Chain Waitrose Opens the Second of its New, Small-Format 'Market Town' Food Stores

Upscale British food retailer Waitrose opened the second of what could be up to 100 of its new small-format "Market Town" food and grocery stores in Buckingham, UK last Thusday.

The first of the new small-format "Market Town" food stores or shops--which Waitrose managing director Mark Price calls "purpose-built" small-format stores because they are designed to be "local," limted assortment food stores with a major focus on fresh foods and locally-grown produce, as well as being located in small or market towns--opened just last month in St. Neots Cambridgeshire.

Waitrose's upscale supermarkets in the UK average 20,000 -to- 30,000 square feet and follow the supermarket format of offering a little bit of everything in terms of food, groceries and non-foods, all with an upscale and gourmet focus in Waitrose's case of course.

The grocer's supermarkets also are located in, and targeted to, all areas in the UK, but primarily urban and suburban regions.

In contrast, the geographical focus of the "Market Town" small-format stores are small towns. The merchandising focus is to devote about 50% of the total store square footage to fresh foods and fresh produce, selling as much locally-produced produce as possible, and the other half to a limited assortment of groceries, specialty, gourmet, natural and organic products, and a smattering of non-foods items.

The next Waitrose "purpose built" small-format "Market Town" food store is set to open in July in the town of Brackley, Northamptonshire.

Here is what Waitrose chief Price said about the Buckingham "Market Town" store opening on Thursday, June 5 in his "The Grocer's Blog" on Waitrose's website on Friday, June 6:

"Thursday was a particularly enjoyable day as we opened our first purpose-built 'market town' branch in Buckingham. This is an approximately 10k square foot format for smaller retail sites that specialise in fresh food and local produce. The branch looked fantastic and feedback from customers was incredibly positive. The reception we got in Buckingham gives us great confidence that we're in a good position to roll out new Waitrose shops into towns and villages we previously thought might not have suitable sites."

Price says what Waitrose is aiming to do with the "Market Town" small-format food stores is to refelct the ambience of a traditional British food shop, as well as being as "local" in product assortment, design features and elements, and service-orientation as possible.

"Our brand has traditionally had a 'sweet spot' of around 20,000 square feet, but in a competitive environment we need to be more flexible and improve the potential of the smaller shops in our estate," Price says about one of the key reasons Waitrose developed the "Market Town" format stores.

"The 'Market Town' format will allow us to achieve that, as well as giving us new opportunities to grow the business. We are going back to the grass roots of the traditional town food shop, which aims to reassert the sense of community and service associated with our brand." Price says.

The local and community aspect is key to the success of the small-format "Market Town" format, according to Price.

"By engaging with the community in our research, as well as providing local information and more local produce, we want our customers to get a real sense that this is their shop. We have always taken pride in being a fresh food specialist, and in the support we offer small and local producers. With this concept we have dedicated more space to fresh foods and more locally sourced products than ever before," Price explains.

Below are the key format distinctions or innovations of Waitrose's small-format "Market Town" stores:

>They have A small food store or shop design, look and product selection, tailored to the needs of the particular town the store is located in.

>Local is key to the format. For example, the stores sell nearly 200% more locally-produced food and beverage items compared to traditional Waitrose supermarkets, which already sell lots of local goods.

> More emphasis on fresh foods with over half the food store or shop dedicated to fresh products, as we mentioned above.

>Each store will have a community bulletin or information wall that will feature local information regarding the town, pictures of local food producers, and related information and graphics, all with a community emphasis.

>A new convenient bakery design, unique to the "Market Town" format, and designed to be a modern version of a traditional small food shop bakery.

>Waitrose Deliver, the retailer’s online shopping service, will be available in the small-format stores so that customers can have their grocery orders delivered to their homes if they desire, just as is the case with small town grocers.

>The "Market Town" format features a different layout than Waitrose's supermarkets, including having fresh and frozen foods merchandised next to each other and seasonal fruit and vegetables merchandised side-by-side in the produce department.

Waitrose could open as many as 100 of the small-format "Market Town" grocery shops in small towns throughout the UK in the next couple years, according to managing director Price.

Each store will reflect the unique aspects of the town it's located in, says Price. The 50% fresh foods, 50% other format will be the same for all of the small-format food stores. However, each store's design elements and product selection will reflect the community it's located in to a large degree, just like a neighborhood independent grocery shop does, according to Price.

The "Market Town" small-format stores are natural for Waitrose historically in that the supermarket chain, which is today owned by the John Lewis Partnership, began in 1904 as a small grocery shop named Waite, Rose and Taylor in West London.

That first shop, pictured here, was much smaller than 10,000 square feet. However, it's local roots and specialty-orientation is what's provided the base merchandising philosophy behind Waitrose to this day--not to mention the derivation of its name.

Therefore, in a sense Waitrose is merely going "back to the future" with its new small-format "Market Town" food shops.

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