Waitrose - a few more pointers
19 March 2018
A few further bits and pieces on Waitrose today after the 'long read' last week, covering their recent results and some thoughts on the wider offer.
I think it's a crossroads for many retailers in terms of their price approach, do you go down the EDLP+ route like Sainsbury's? Reduce promotions but maintain a blend of stable prices and accept you will not lead the market?
The issue for Waitrose is that they've sunk money in to Essential Waitrose but not reduced the deals, which means the price cuts lose impact as all customers are enticed by red labels and a price cut.
So without a reduction in deals, the price cuts struggle to get any traction. Not just that, but any price campaign can have a negligible impact if the cuts are not deep enough.
It's hard for Waitrose to talk about price as they do charge more for products given their place in the market. However in the era of online and discount, quality has to be self evident to justify this.
In this age of price comparisons, it makes it important that comparable lines are close to competitors, otherwise the price campaign turns in to an advert for how much you were charging and how much cheaper the competition still are.
Dinner for two was rolled out once more by Waitrose, meal deal is a competitive angle for them at the minute. Given the work by M&S in this arena (some 3/4 deals at once) it's important Waitrose keep pace here.
I think with the price campaign on Essential, it's important to highlight prices around the store for customers. Then customers see this and are tempted to look in to the fixture for said product.
However the challenge is two fold.
1) This signage hangs like an art installation for the range. However it doesn't actually communicate anything to the customer.
2) Therefore without a price; there is no call to action and the chances of a customer looking up, then at the fixture, then finding Essential versus a plethora of branded deals is near to impossible.
So what is the purpose of the signage?
Even outside the store, there isn't a price message. What does that say to customers? A price led campaign that doesn't feature any prices?
As above, how does the signage generate a call to action?
It looks nice but doesn't talk about price, without a price message then how can customers know prices have been lowered?
A slight gap between competitors and Waitrose can be explained by a perceived gap in quality. Without the price communication, it's hard for the range to stand out versus numerous special offers (as show in the last email).
Solid bays of Essential have been often part of the assortment in Cereals and Pasta, they also feature shelf stripping that further calls the range and brand out to customers.
Their prices are more than the market, within Cereals there is potentially a quality based argument that Waitrose would try to claim, whether customers believe it, or whether any gap is narrow enough be 'accepted' remains to be seen.
It would be more effective to intersperse the Essential range in with the core Cereals to provide a value comparative versus branded equivalents.
However then, the sight of any promotion would attract the attention over Essential which means the price cuts can be in vain. As the volumes that then increase are the lines on deal.
The only way around this is to have a longer term strategy and aim to reduce the number of deals on shelf, providing price stability and trade in to Essential.
For buyers / traders used to 'one way' and that being brands, deals and the 'drug' that is so hard to get off.... This is one that doesn't compute.
Prices are not easy to see on the white/black background of the shelf stripping anyway and the price points are not great versus the market.
The Grocer 33 often has Waitrose well adrift of the pack each week, but low, low prices are not really the aim of the Waitrose game anyway. So running their plethora of deals and then a range of price cuts on own label makeseven less sense.
Pasta as an example is where you'd expect some work to be done perhaps, the Co-Operative are now 56p post their price cuts, Asda even lower at 45p.
Sure these are not direct competitors; but if Sainsbury's were to lower prices in this area, then M&S would follow given their price matching scheme. Which then leaves Waitrose out there.
To not emphasise prices/cuts in the new year, or indeed now as the signage reappears in store seems odd.
More should be made of the price cuts (or at least, the price now) alongside looking at how many promotional deals in one category are run versus the Essential product (with a mere 'price').
Because you can shift volume that way, looking at what you, yourself as the retailer is doing at the shelf edge before considering whether the price cuts are going deep enough.....
Did you know? We produce in depth, periodic reports.
From the Grocery Insight newsletter archive, first sent to subscribers on 19 March 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.