March 7 (Bloomberg) -- Waitrose Ltd., the upscale U.K. grocer owned by John Lewis Partnership Plc, aims to double its market share by matching competitors’ prices and extending its geographic reach, Chief Executive Officer Mark Price said.
The chain, which is gaining business as market leader Tesco Plc’s dominance wanes, has potential to increase its share of British grocery spending to as much as 10 percent from 4.5 percent, Price said today at press conference at John Lewis’s store in Stratford, east London. He didn’t give a timescale.
“There are 5 million people who shop in Waitrose today because they have access -- if you look at the customer profile there are another 6 million customers who should be Waitrose customers, but just don’t have access to our shops,” he said.
Waitrose increased investment by 30 percent last year, including 7 million pounds ($11 million) on product innovation and matching the prices of competitors such as Tesco, the CEO said. The spending caused the chain’s operating profit to decline 5.2 percent to 260.6 million pounds in the year ended Jan. 28, though profit increased in the second half, Price said.
Waitrose plans to open 27 convenience stores and supermarkets this year, after adding 29 last year. Most of the retailer’s 274 outlets are located in southern England.
The chain has increased the number of promotions by 4 percent in the last year and developed own-label ranges such as Love Life healthy meals and the budget-priced Essentials line, where sales last year reached more than 1 billion pounds. About 4,300 product lines are planned this year.
“Absolutely budgeted in our plans are to match any movement in the market in any year and to improve beyond the market and we intend to do that again this year,” Price said.
Waitrose has taken market share from competitors including Tesco, which this week unveiled plans for a fightback by adding 20,000 U.K. jobs to increase peak-hour staffing and improve service at its fresh produce, meat and bakery counters.
John Lewis Chairman Charlie Mayfield said he expects “some small improvement” in business conditions this year.
“I wouldn’t say I would be optimistic, I’d say cautiously optimistic,” he said. “I do hope we’ll perhaps see the trajectory shifting within the U.K. economy as a whole from one of decline into something of small growth as the year goes on.”
John Lewis, the employee-owned retailer which also owns the U.K.’s largest department-store chain, today reported a 3.8 percent decline in annual profit and cut its staff bonus by 15 percent, the first reduction in three years.
Waitrose’s operating profit rose by 2.2 percent in the second half after declining 13.8 percent in the first half, Price said. The grocery chain’s same-store sales in the last five weeks have gained 2.2 percent.
The vast majority of Waitrose customers are “using us for special occasions or top-up and those customers need assurance they can load their basket with all the brands and it’s not going to cost them more,” Price said. “What we’re never going to try to do is to make Waitrose like the other supermarkets.”
The chain’s new online grocery delivery business is yet to break even, Price said, though he expect sales growth to accelerate to “30 percent plus” this year, after gains of 28.4 percent last year. About 20 percent of its sales now come from within the boundaries of the M25 orbital motorway circling London, where competitor Ocado Group Plc, which also sells Waitrose products, gets the majority of its sales.
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