Waitrose muscles in on convenience sector with plans for up to 300 stores

Published on Thursday 24 September 2009 21:14

WAITROSE has raised the stakes in the battle for the £29 billion convenience store market with plans that could see it opening 300 smaller shops to rival Tesco Express and M&S Simply Food.

The middle-classes' supermarket of choice yesterday revealed it wants to open a series of small, neighbourhood stores early next year before rolling out as many as 300 across the UK.

Trials of larger high street stores in Nottingham and Bristol have proved successful, Waitrose said. It intends to open two stores in London and Oxted in Surrey before testing the smaller format in the new year.

The chain has also agreed partnerships with Boots and Welcome Break, after it identified 6.5 million potential customers currently unable to access one of its supermarkets.

Waitrose, part of the John Lewis Partnership, will open a further nine shops at Welcome Break service stations over the next few months, following trials off the M40 at Oxford and the A1-M25 at South Mimms. The next three outlets are expected to open as early as November, although the locations have not been disclosed.

Boots has agreed to stock Waitrose food at some of its high street branches, while the latter is in the process of rebranding 13 in-store pharmacies to Boots.

Waitrose managing director Mark Price said the plans will create thousands of jobs, while a spokeswoman would not disclose the locations of the new convenience stores, but added: "We would certainly be interested in sites in Scotland."

In July Waitrose unveiled extensive expansion plans in Scotland, starting with the opening of a branch in Byres Road, Glasgow, in November.

With growth in the convenience store market outpacing the wider grocery market in the past 12 months, a number of supermarket giants, including Sainsbury's, Tesco and Morrisons, have been keen to jump on the bandwagon. Research group IGD says the convenience store sector has expanded by 6.1 per cent over the past year to 29.1bn. IGD estimates it will be worth 39.7bn by 2014.

Analysts said that although Waitrose will face tough competition from the Co-op and Tesco in particular, the upmarket chain has struck a chord with shoppers recently with the launch of its Essentials range. During the 12 weeks to 6 September, Waitrose achieved the highest growth rate of any supermarket since August 2006, at 11.2 per cent.

Kate Heseltine of Seymour Pierce said: "Waitrose has been phenomenally successful, really gaining market share. It has a very good offering, which it has strengthened a lot with its Essentials range. It would potentially do very well from it (the convenience store roll-out] – certainly in locations like London."

Robert Clark of the Retail Knowledge Bank called the convenience store move "very canny".

However, he questioned the wisdom of the Boots partnership after the failure of a similar collaboration between the chemist and Sainsbury's resulted in the two retailers writing off more than 10m in 2003.