Waitrose, the upmarket grocer, has intensified the UK supermarket price war with a set of personalised discounts that could cost it £5m a week.
The grocery arm of the employee-owned John Lewis Partnership on Wednesday launched what it described as a “game changing” pick-your-own offers scheme, which enables holders of its MyWaitrose loyalty card to receive 20 per cent price cuts on 10 products that they choose.
Mr Price acknowledged the move was a “gamble”, but it was a similar bet to when Waitrose launched its Essential range of lower priced everyday items in 2009, and free coffee and newspapers three years ago. He said these initiatives had helped the supermarket’s sales growth outperform rivals by about 5 per cent.Mark Price, managing director of Waitrose, said the scheme was poised to overturn the entire promotional landscape within supermarket shopping.
“This really is ground breaking,” he said. “This really is saying ‘you get what you want at a discounted price whenever you go shopping’. This is not about dancing to the tune of a promotion dreamed up by the buying office or the marketing office.”
Mr Price admitted the scheme could be “very, very expensive” for Waitrose.
He estimated it could cost the supermarket chain £5m a week — based on 1m of the 5.7m holders of its MyWaitrose loyalty card saving £5 a week — or about £250m a year. If more people signed up, then it could be even more expensive.
“You are into telephone numbers,” he said of the potential cost.
But Mr Price hoped this would be offset by an increase in sales, as customers stayed more loyal to Waitrose rather than shopping around for the best deal.
Waitrose’s sales growth has slowed over the past year, and the supermarket also reported a 23.4 per cent fall in operating profit in the year to February 1.
Clive Black, analyst at Shore Capital, said Waitrose had put a “cat amongst the promotions pigeons”. He said the scheme “genuinely empowers its shoppers and we will be intrigued to see what traction it gains and how it ripples around the trade”.
“The heavy lifting in bringing the market into line with the German discounters is done,” said Mr Price.Mr Price denied the scheme was a reaction to the growth of the German discounters Aldi and Lidl, which have already gained market share from the so-called big four supermarkets — Tesco, Asda, J Sainsbury and Wm Morrison — and are now increasingly moving upmarket, with premium products and canny advertising campaigns aimed at more discerning shoppers.
Under the scheme, a MyWaitrose card holder chooses 10 products from almost 1,000 available, of which more than half would be fresh produce. Products would also be split roughly equally between branded and own label lines.
Customers choose their 10 products online, which remains fixed for three months and the discount is applied every time they use their MyWaitrose card in store or online.
The saving would apply to products on promotion or price-matched against Tesco or J Sainsbury.
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