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If there’s a sign that Waitrose has found its form again in serving the British middle class, it could be an alliance with Yotam Ottolenghi.
The retailer started stocking sauces, pastes and spice mixes from the dinner party at the end of April. Insiders say jars of pomegranate, rose and lemon harissa paste and miso pesto are selling well and exceeding expectations.
The Ottolenghi mash-up came after Waitrose owner John Lewis Partnership reported it returned to profit in the year to January after three years of heavy losses. That was largely due to the performance of Waitrose, which increased sales by 5 percent to £7.7 billion. In contrast, John Lewis’s department store business saw a 4 percent decline in sales to £4.8 billion.
Outgoing John Lewis chairman Dame Sharon White said in March that the company would now focus further on its retail offering by opening more Waitrose stores and refurbishing existing stores. That broad strategy appears to have been endorsed by the choice of White’s replacement: retail veteran Jason Tarry, who starts in September after 33 years at Tesco. But retail watchers will be looking at the details of how Tarry, who is expected to play a hands-on role at John Lewis, executes that plan and how he will work with James Bailey, Waitrose’s division boss, and other executives.
Bailey, a former purchasing director at Sainsbury’s, joined in April 2020, just as the Covid-19 pandemic hit. Since then it has had a torrid time in Britain’s highly competitive supermarket arena, from which it is only just emerging.
Since 2020, its market share has fallen from 5 percent to 4.6 percent, and is now only slightly higher than that of Marks and Spencer. Rising inflation caused some consumers to stock up on products, looking for lower prices elsewhere. Waitrose also suffered a painful decoupling from Ocado, the online supermarket that sold its products for almost two decades. Just as online shopping was given a boost by the pandemic, it was sidelined by Ocado for a now resurgent M&S.
And last year Waitrose was plagued by technology problems. It also lacked the firepower to meaningfully invest in its operations or launch a series of price promotions amid cost-of-living pressures due to its unusual employee structure, which limits financial room to maneuver.
Waitrose said this year it plans to expand its 331 stores in areas where the brand is underserved, its first expansion in about a decade, and renovate 80 existing stores over the next three years. It is a costly but necessary undertaking, with fierce competition for scarce space that could be profitable.
Some analysts also suggest that when Tarry arrives he should work with Bailey to devise a price match program to boost Waitrose’s value. Both Tesco and Sainsbury’s have credited their initiatives to match discounter Aldi on the price of hundreds of items with boosting sales in the past few years.
“You wouldn’t be surprised if Tarry comes in and says ‘we had real success matching Aldi with Tesco’. “Maybe Waitrose doesn’t need to match Aldi, but if they brought in Sainsbury’s or M&S’s price match it would help,” said one sector watcher.
But Richard Hyman, a retail analyst at Thought Provoking Consulting, believes Waitrose should not try to be “all things to all people”, but rather be confident in its high-quality offering and prices.
Waitrose is also looking to deepen its relationships with its customers, as Tesco and Sainsbury’s have done with their loyalty programs. The group said last year that it would launch a program this year that would include John Lewis and Waitrose. Retailers will also be watching to see if Waitrose reintroduces a perk similar to its free newspaper offer for loyalty card holders, which was axed due to cost savings in 2022.
Tarry was instrumental in turning around Tesco after it was hit by an accounting scandal in 2014. Hyman says the hope is that Tarry can do something similar at John Lewis and Waitrose. But he says Tesco’s culture is very different to that of risk-averse Waitrose. Tarry will have to get “involved in the weeds” of the retailer’s operations. “This is a huge career move,” says Hyman.
laura.onita@ft.com