Credit: Duncan Hull/Flickr

Waitrose isn't immune to the supermarket squeeze

John Lewis sales were up over Christmas, but its food-focused sibling is struggling to keep up.

by Jack Torrance
Last Updated: 10 Mar 2016

The malaise that has afflicted the grocery sector over the last couple of years has primarily been a problem for the mid-market. While the 'Big Four' supermarket chains (Tesco, Sainsbury's, Asda and Morrisons) have struggled to maintain sales, those at the discount end of the market, like Aldi and Lidl, have boomed. Meanwhile premium retailers like M&S Food and Waitrose have enjoyed solid, steady growth.  

But now it seems the latter has gone off the boil somewhat. Though total Waitrose sales in the six weeks to January 2 were up by 1.2% to £859.8m, like-for-like sales (which exclude revenue generated from new stores) were down 1.4%.

That’s largely down to the inescapable spectre of food deflation, which has hit the whole market hard. ‘The fact is, if broccoli is half price, you and I have to eat twice as much for us to make the same money,’ Charlie Mayfield, chairman of the John Lewis Partnership (Waitrose’s parent) told the BBC.

Nonetheless, for a supermarket that reported annual sales growth of 6% as recently as 2014, this was a pretty disappointing Christmas. It seems like its outgoing MD, the ‘chubby grocer’ Mark Price, could be jumping ship at just the right time.

Performance at Waitrose’s department store sibling, John Lewis, was looking a lot more robust. Gross sales were up 6.9% to £951.3m, and up 5.1% like-for-like. It seems that losing the Christmas ad war didn't make much of a dent in its performance. 

Sales increased across its departments, including a 9.6% jump for tech and a 5.1% jump in homewares. Fashion sales were up too, by 6.1%; a bloody nose for its rival Next, which blamed its lacklustre performance on the weather yesterday.

John Lewis did particularly well online - sales were up 21.4% and now accounting for around 40% of its total revenue. That will have been a big challenge as its distribution network felt a bit of a squeeze. Over the Black Friday weekend its fulfilment centres processed five units per second and shipped 18% more parcels than last year. That must have left its warehouse staff feeling absolutely knackered.

‘Our performance reflects to a large extent the significant investment we have made in our distribution and IT capability,’ Mayfield said. ‘Despite the fact trade was even more concentrated across a number of very busy shopping days, our operations performed especially well.'

Overall the partnership fared pretty well over Christmas, with sales up 4.1%. It’s just a shame that Waitrose put a dampener on the festivities. 

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