Following the news that Waitrose & Partners intend to treble the size of its online operations to a £1bn business over the next three years, Thomas Brereton, Retail Analyst for GlobalData, a leading data and analytics company, offers his view:
“Waitrose’s new partnership with TDP will provide it with the capacity needed to compete in an increasingly competitive online food & grocery market, potentially doubling its share of the market to 5% by 2022 – a resilient move in the face of the termination of its supply deal with Ocado next September. This appears a shrewd strategy, with GlobalData forecasting the online food market to grow 29.1% to £19bn by 2022 – significantly faster than the 8.8% growth of the whole market over the same period.
“But although the promise from new partners TDP to build three customer fulfilment centres (CFCs) using ‘state-of-the-art technology’ puts Waitrose on a more even keel with Ocado with respect to logistics and capacity, it will take an equal effort to widen its customer base to achieve such an ambitious target. Ocado has a significantly more established online presence, with its share of the online food & grocery market expected to reach 10.7% during 2019 – fourth behind Tesco, ASDA and Sainsbury’s.
“For Waitrose to succeed, it will need to rely on brand loyalty and the associated quality to ensure that it lures as many customers as possible from Ocado when the existing supply deal ends in 2019, and must ensure that it has established unique product ranges to encourage current Ocado shoppers to follow the Waitrose brand rather than accept the changes to M&S products.”