Waitrose’s goal of tripling online revenue in three years is unachievable


While much of the attention in the grocery and grocery market has recently been shifted to Aldi and Lidl, another battle is intensifying: the mid-to-high-end online sector.

Waitrose & Partners aims to triple its online food and grocery business over the next three years to reach £ 1 billion. However, with M&S set to invest £ 750million to buy half of the retail operation of ex-Waitrose partner Ocado.com (completed in August 2019), and others Factors preventing an increase in the online grocery market, rapidly increasing online income seems like a Herculean task. .

First, the raw data shows how overly ambitious this is. Waitrose’s online penetration was confirmed at 5% around the same time last year, and GlobalData estimates its annualized online sales for 2019 to be £ 325million.

If Waitrose expects to reach £ 1bn in online sales by 2023, announcing plans in September 2019, it will require online penetration to exceed 17% and a CAGR of 32.4%. This can happen, generously assuming that Waitrose’s total revenue grows in line with the overall grocery market, discouragingly higher than the 10.7% of online grocery sales reported for the former. semester 2020 or 16.7% for the seven week Christmas period.

Waitrose has taken valid first steps to position itself for some gains in the online market. He’s embarked on a number of innovative delivery experiences such as While You’re Away, which is a program for delivering and unpacking groceries while the owner is away, first tested in October 2018. Another new initiative was the expansion in 2019 of fast delivery. The Waitrose Rapid system was first tested in September 2018 in cities beyond London after an initial success in the capital.

To help deal with additional operational pressures as the line expands, Waitrose will also open a second Customer Processing Center (CFC) in Enfield, north London, in 2020. Recently another announcement from Waitrose, citing plans to roll out its delivery service to 24 of its stores to increase its national coverage shows just how seriously it now takes its online grocery presence.

But these factors alone don’t appear to be enough to catapult Waitrose’s online market share from 2.9% in 2019 to the desired 6.4% by 2023. While such adventurous delivery trials are applauded, Waitrose just doesn’t have the customer base to achieve such tremendous growth online. So for Waitrose to come close to its £ 1bn target, it will require substantial organic customer growth.

Waitrose will be able to tempt shoppers with coupons and introductory offers such as recent offers of £ 10 off the upcoming Waitrose.com grocery store. Unfortunately, this will not generate enough interest to be able to generate an additional £ 675million in income per year.

And then there is the question of the direct competitor Ocado and the new merger with M&S, which will see the Waitrose range of 4,000 references currently on Ocado replaced by 6,000 M&S products on September 1st. Ocado guarantees that “virtually all Waitrose own-brand products” will have a similar replacement product.

M&S has invested a lot of money to gain a foothold in the online grocery market, and this will not be the one they let go lightly. Waitrose is hoping loyal brand customers will go with them in September. However, consumer survey data suggests that a small proportion will. Of current Ocado shoppers, only 11.6% said they would shop at Waitrose if Ocado was not available, with Tesco, ASDA and Sainsbury’s all having effective online proposals that themselves have the potential to deliver results. larger gains than Waitrose as a result of the switch.

To be successful, Waitrose will need to pull off several difficult feats at the same time. This includes converting its own physical buyers to online customers, stealing customer share from competitors, including encouraging buyers like Sainsbury’s to trade and move online, and accelerating the development of CFCs to cope. to the increase in logistics. However, given the turbulent management waters at JLP and the pressure on the high-end segment of the grocery market from other factors, Waitrose has almost no predictable chance of meeting its online goals.


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