Upscale British supermarket chain Waitrose says it plans to enter the lucrative and highly competitive small-format, convenience-oriented grocery store segment in the United Kingdom (UK) opening its first small-format grocery shop early next year.
With the launch of its new grocery-convenience store format, Waitrose will take on three of the UK's leading retailers: Tesco (Tesco Express format), Sainsbury's (Sainsbury's Local format) and Marks & Spencer (Simply Food format), all of which operate small-format grocery shops in the nation.
Tesco is the leading food and grocery retailer in the UK. Sainsbury's is number three, after Wal-Mart-owned Asda. Marks & Spencer (M&S) and Waitrose are the UK's two leading upscale food and grocery chains, with M&S holding a higher share currently than Waitrose.
Waitrose, which is owned by the John Lewis Partnership, which also operates department stores in the UK as well as opening its first upscale food halls last year, wants a piece of the small-format, convenience-oriented grocery retailing segment, what is a ~27.4 billion-p (British Pounds) market in the UK and fast-growing.
According to Waitrose, its convenience grocery shops will average about 3,000 -to- 4,000 square feet in size.
Although Waitrose didn't go into any detail in terms of describing the stores, based on Waitrose's upscale brand, and conversations Natural~Specialty Foods Memo has had with two UK industry observers, we think the Waitrose small-format, convenience-oriented food stores will be more similar to, as well as primarily target competitively, Marks & Spencers' Simply Food shops, which are smaller upscale food stores of a more upmarket nature and format than those of Tesco and Sainsbury's.
By contrast, Tesco's Tesco Express and Sainsbury's Sainsbury's Local convenience -style grocery stores are more middle-market in terms of design and merchandising.
Waitrose's new convenience grocery stores will be located primarily in urban and suburban cities in the UK.
The UK's Co-operative Group chain also operates numerous small-format, convenience-oriented grocery stores throughout the nation. The Co-op stores put an emphasis on natural and organic foods, as well as sustainability, but sell selections of basic groceries as well. The non-profit Co-op, already a significant retail force in the country, is preparing to become an even bigger player in UK food and grocery retailing with its pending acquisition of the Somerfield supermarket chain, which could come later this week. Somerfield has 900 stores.
Waitrose's new 3,000 -to- 4,000 square foot convenience grocery chain comes right on the heels of its recent creation of it's small-format "Market Town" chain, which is designed specifically for smaller towns and villages in the UK. We reported on the "Market Town" development in this piece on June 10. Thus far Waitrose has opened two small-format "Market Town" village grocery stores, with many more to come. The "Market Town" stores average about 13,000 square feet in size.
It's not surprising Waitrose wants to enter the convenience grocery store sector. According to UK retail market research firm IGD, overall sales in the small-format convenience grocery retailing sector grew by about 5.1% in 2007, which is about 30% more than in the larger supermarket sector.
Entering the convenience-oriented, small-format food and grocery retailing segment also gives Waitrose more options. Along with its Waitrose supermarkets, which average 20,000 -to- 35,000 square feet, its new "Market Town" small-format village grocery stores, and now its 3,000 -to- 4,000 square foot convenience grocery stores, Waitrose will likely be better able to compete against its competitors, who all have multi-retail format strategies.
The development also is a part of Waitrose CEO Mark Price's aggressive plans to make Waitrose a bigger player in UK food and grocery retailing. Price wants not only more formats and many more stores across all formats, he also wants to reach a larger segment of British consumers, rather than the generally upper income shoppers and food lovers who comprise its customer base.
To this end, Waitrose has been lowering everyday prices as a way to be more competitive with less wealthy UK consumers. They two new small-format chains also are part of Price's design to reach more consumers--both urban, suburban and rural residents--in the UK.
Waitrose also is the primary owner of Ocado, which is the UK's leading internet-based, home grocery delivery company. Waitrose and Tesco are currently going head-to-head in an Internet-based grocery store/home delivery price war, battling for the home delivery shoppers dollars.
A Waitrose spokesperson told Natural~Specialty Foods Memo that the food retailer could have its first of the convenience grocery store opened in the UK in just six months, and that it would be no later than nine months before the first store opens.