Price cuts in Waitrose
22 September 2017
COMING UP
Now: Price cuts at Waitrose
Soon: What about Wilko?
Then: M&S - Did the lack of a sale impact food?
Later: Wish it could be Christmas every day?
In the last recession / credit crunch / global meltdown / 'great recession' as I found it termed on Wikipedia the other day.... Waitrose were a surprise success story when they landed their Essential tier, offering a compelling own label choice, without costing the earth.....
In many ways, they were ahead of the curve as they correctly played the own label game, seeing that it was a key way to drive sales (exclusivity, control by retailer). Own label was becoming more acceptable to customers, given the success in which the discounters had pushed their own brand products in their stores.
Another retailer at the time to weather the recession based storm reasonably well were Sainsbury's, who never had their nadir of c. -5/6% like for like sales declines like their compatriots. However they were/are stronger on own label and customers traded 'down' on price with own label vs. brands, but not quality.
The Waitrose move was largely lauded by customers who felt there was a compelling reason to shop for their groceries at Waitrose, rather than selected fresh / ambient items. The Essentials brand enabled Waitrose to over-arch tinned Potatoes, Cereals and other core products under one banner, in a non-value tier based way.
It wasn't for everyone, and some of the core Waitrose customers were horrified at the branding and feeling that Waitrose had somehow gone 'down at heel' in trying to enhance value credentials with a new range.
So some 8(!) years after that range landed in stores, Waitrose have moved to cut prices (although not changing branding seemingly) of their Essential tier, with bold signage in store and around the various categories.
The price cuts are clear around the store, but the campaign struggles for cut through versus the half price event also in store. With some of the shelf edge advertising 'overloading' the fixture too....
But nevertheless, irrespective of how much money you have as a customer, everyone appreciates efforts by the retailers to save them a little more cash.
We know inflation is rampant at the minute and the retailers are doing a good job of managing the costs, input pressure and passing on what they need to.
Where it's too much; on Cream for example. We have seen widespread rises in prices across Butter, fresh Cream products and the like on a specific line by line basis. However the overall 'category %' is then kept under control by the number of promotions....
What doesn't help inflation is the fact that Butter/Cream in particular were in deflation. So the swing back to inflation has been keenly felt.
Produce is another category that has suffered with inflation, weaker sterling impacts US($) based imports - Bananas, with the weakness vs. EUR will impact further in to the Winter as we switch from British to European suppliers for the wider Produce ranges.....
We can see the impact of Produce prices and inflation on Aldi, who traditionally hit a defined price point for their lines, be it 45p or 39p etc. Recently, they have been varying price points from 45p - 55p and generally not having a solid message to get behind in this respect.
Waitrose are under pressure from discounters like everyone else, and part of this reason is the growth in premium ranges which appeal to the well heeled masses.
As discounters actively target those middle class locations to site stores, now they're accepted gladly by shoppers. It puts pressure on Waitrose and M&S to sharpen their offer around other elements, not just price.
No price cuts in Pasta but the range can look a bit tired in comparison with efforts elsewhere. Especially with own label improving significantly at discounters, let alone efforts by Tesco and co.
The packaging and branding are reasonably timeless, it does what it says on the packet/tin... But there could be scope for further work around the range perhaps...
In Pasta it seems to make sense to have a full bay of own label, however the work that Tesco have done, highlighting their own label within fixture and highlighting that price.... at eye level rather than the price of Barilla, DeCecco etc.....
Could more be done to intersperse their own label within the fixtures?
The tagline of 'why compromise on the things you buy the most often?' indicates that customers may not buy some of the Essential range as it's too expensive....
Perhaps that's a fair comment, but there is little noise around the store about these cuts being permanent, or indeed the level / number of price cuts at the shelf edge.
These being 'lower in price' could form part of an event for the customer, although they will benefit from lower prices as time goes on.
The signage in the store foyer was clear around the range and the subsequent focus on the products, however there was nothing around the was/now element of the prices on the backboards.
It was just images of the product and a description of the product. An opportunity missed perhaps? It's never easy to conduct a price campaign in a retailer that is predominantly premium focused, but it can be done in a 'clever' way....
The focus on recipes was clever though; to drive sales, customers like recipes and with the Waitrose customer base presumably having a fair amount of scratch cooks, it's a decent piece of work here to drive sales.
At the shelf edge, there are a number of price labels around the store that flag the price cut in a reasonably impactful way.
However there are lots of these signs around the store, in some categories it can be overload, especially as other deals are also running which dilutes this message somewhat.
The Green Olives didn't feature a 'was' price which didn't make the comparison entirely clear here, why were they featured?
A 6p cut on Tinned Fruit won't be pulling up any trees, but the effort to bring people in to Waitrose in September as the Christmas season / golden quarter gets underway is notable.
A price campaign from Waitrose is major news in fairness, given the market being competitive at the minute as we start to approach Halloween and the key Christmas period, at a high level, it makes sense for Waitrose to target price cuts.
Value is always a challenge for every retailer, especially with B&M and Home Bargains on the scene, real disruptors that even Waitrose are not immune from.
Timing this now, ahead of Christmas makes sense to try and get people through the door and be pleased with what they see, in the hope they return for Christmas.... But would one expect to see signs of Christmas and a premium message appearing?
This campaign certainly gets the price message out there, but does struggle with the clarity of the specific message.
I.E. what is the key takeaway for customers? Essential ranges are back in Waitrose? xx number of price cuts? Permanently lower prices here?
Unclear; but the proof of the pudding will be in the eating so to speak, and Waitrose can continue to push hard on own label and food quality, that is their core market and should remain that way.
Inflation remains a challenge and with customers on fixed wages, with inflation outstripping income and fuel prices on the rise....
It will be a thoughtful Christmas for many customers, that's for sure.
From the Grocery Insight newsletter archive, first sent to subscribers on 22 September 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.