17 Sep 2020
Posted in Retail
Waitrose quickly shedding unprofitable stores to raise the stakes online
Following today’s release of Waitrose & Partners H1 figures for 2020/21, Thomas Brereton, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:
“Waitrose’s decision to close three stores (Ipswich Corn Exchange, Caldicot and Shrewsbury) and sell one more (Waitrose Wolverhampton to Tesco) is an unfortunate but necessary decision as it continues to revamp operations to deal with the new demands of the consumers, ridding unprofitable locations as it continues to pour investment into the online channel. This comes as Waitrose reaches the landmark of running a £1bn annualised online business, following a tremendous increase in home delivery capacity during the coronavirus (weekly orders now up around 180% compared to pre-coronavirus levels), and now accounts for c.15% of the Waitrose business compared to 5% 18 months ago. Waitrose’s e-commerce platform is now (arguably) the most attractive part of the whole John Lewis Partnership, and it is understandable why Waitrose wishes to expand capacity by another 50% in the near future, particularly as Ocado, Amazon and Sainsbury’s all look to claim a larger stake in the flourishing channel.
“Unfortunately, such bold online ambitions bodes ill for the stores and the Partners that work there. 19 outlets have closed over the past 18 months, and it certainly seems at this point that Sharon White is by no means finished in leaving her mark on the business. Waitrose has again reiterated its worst-case scenario of 5% full-year revenue fall, a situation that would require H2 revenue to decline c.20%. And, given the formidable growth witnessed in online, results anywhere near this would mean either: a) another COVID-19-level catastrophic event occurring, or b) – and much more likely – that Waitrose knows something about the upcoming performance of its physical stores that others don’t yet. So, while important to remember this is a “worst-case” scenario, it implies that the cull of unprofitable or unmalleable stores remains far from over.”