Essays on Waitrose Looks To Take On Its Rivals With Online DriveThe Online Grocery Market Is One Of The Assignment

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Waitrose: Planning the Online Drive2009IntroductionIn the United Kingdom, competition has intensified among supermarkets tremendously over the last decade or so as consumer spending on food and grocery has stagnated, land has become scarce and out-of-town planning regulations have made supermarket expansion increasingly difficult (Hawkes, 2008). As a result, companies have had to introduce innovative selling, sourcing and supply chain management strategies in order to maintain the competitive edge. While large retailers like Tesco has aggressively increased the number of stores, and sourced products from across the world in order to maintain margins, Marks and Spencer’s Simply Food, launched in 2001, has concentrated on high-street market segment.

Smaller chains like Waitrose have increased the product portfolio from food and grocery to non-food items as well. Although the sales of traditional food and grocery have stagnated, that of other items like fresh food, organic food and ready meals, in which Waitrose has specialized, has increased. Besides, different channels of selling have emerged, like home delivery and electronic shopping, putting more pressure on the supermarkets which therefore offer various in-site and off-site facilities like fish counters, pharmacies and petrol stations, to woo customers.

In this report, I will develop a business plan for Waitrose’s online presence to take on its rivals. Structure of supermarket competitionNearly three-fourth of the bread, milk, fruit and meat are sold in the UK through the supermarkets (Fox and Vorley, 2004). Food service through supermarkets, typically that of fast food, is 30 percent of total consumer spending on food and it is expected to grow to 50 percent by 2020. It is, however, not possible to estimate the total market share of supermarkets in retail sales of food, grocery and household goods since the market is heterogeneous.

The convenience sector, valued at $27bn, is the largest segment of the UK grocery market. Each supermarket chain has a particular segment, caters to a certain section of the population and types of location and has a differentiated format. For example, the ‘big four’, that is Tesco, Sainsbury’s, Asda and Morrison have one-stop stores of over 4,000 square meters each at the edges of towns and cater to all price points. Waitrose and Booths are up-market convenience retailers while Lidl and Aldi are ‘deep discounters’ targeting the lower social classes.

However, over the more recent years, these distinctions are blurring as the players are attempting alternate formats. For example, Tesco purchased T& S in 2002 that brought to its fold 1,000 convenience stores. Also, most of the supermarkets are diversifying from food and grocery, the traditional products sold through this format, to include other non-food items like electronic goods, apparel and ready-to-eat food service. Such “channel-blurring” has been necessitated by intense competition among the players (Fox and Vorley, 2004).

However, more and more retailers are now entering the convenience store market, which has been the mainstay of Waitrose (Hawkes, 2008). Ownership of supermarket chains is as varied as the formats. For example, Tesco, Sainsbury, Morrisons and Asda (owned by American retail giant, Wal-Mart) are public limited companies; Booths is a family-owned company; shares of Waitrose are held by employee groups of John Lewis Partnership). As for the geographical spread of supermarkets, Waitrose and Sainsbury are prominent in South England while Asda and Morrisons (prior to the merger with Safeway) have a dominant presence in the north.

Tesco has a national as well as international presence, with 20 percent of its revenues from abroad (Fox and Vorley, 2004).

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