Read full version essay Waitrose Analysis
Waitrose AnalysisPrint version essay is available for you! You can search Free Term Papers and College Essay Examples written by students!.
Join Essays24.com and get instant access to Waitrose Analysis and over 30,000 other Papers and Essays
Autor: anton 03 March 2011
Words: 1104 | Pages: 5
Environmental Fit Analysis
prepared by andidas.com
Working for a management consultancy I have been asked to assist Waitrose in the analysis of its current competitive position and its macro environmental situation in order to aid in deciding possible future strategies.
Waitrose is operating in the UK grocery market, which in 2001 was estimated at Ðˆ103.4bn. Food sales are the core business of the supermarkets and spending on food in the UK has been growing year-on-year since 1990; The market has proved to be very recession proof. However non-food articles account for a growing share. The market is led by the â€˜big fourâ€™ â€“ Tesco, Sainsburyâ€™s, ASDA and Safeway. Together with Somerfield, Iceland and Waitrose these companies take by far the largest chunk of the market.
Waitrose, founded in 1904 and owned by the John Lewis Partnership, operates 137 stores, mainly in the south-east of the UK and currently employs more than 27.000 staff. Stores are of small to medium size, conveniently located. The 2001 turnover amounted to Ðˆ1.98bn (+13%), pre-tax profits to 25.7 million (-15.7%, due to the purchase of 11 Kwik Save stores in 2000). Waitrose is recognized for its focused differentiation strategy targeting the upmarket with a wide range of quality and fresh products.
With the PPG6 it has become difficult to obtain out-of-town planning permissions. This might collide with Waitroseâ€™s indicated strategy of opening new Food & Home Supercenters. Customers put more emphasis on healthy eating and organic food and most are opposed to GM-food. Waitrose fully serves this trend with its fresh, quality foods and their â€˜Perfectly Balancedâ€™ own label. Furthermore the public has become more environmentally aware. Waitrose is undertaking a range of activities to maintain their green image (e.g.â€˜Bag For Lifeâ€™) and publishes an Environmental Report. Along with other chains Waitrose is selling sandwiches and other ready meals that can be eaten on the go.
Internet technology has advanced and spread further, more people use and trust online shopping. Waitrose is making use of latest technology to offer good and cost efficient service. Waitrose Kingston offers the â€œQuick Checkâ€ Scheme which, with the use of handscanners, lets customers scan their own shopping, thus saving them queuing to pay.
Waitrose has specialised in the sale of fine wines, delicatessen and fresh food that can be bought from special counters. Waitrose has a high profit margin on this luxury goods. The new Food & Home Supercenters will also sell non-food products and be bigger than the existing Waitrose stores. This will diversify the risk and increase the potential target market. Along with social trends the introduction of a new store format â€“ Mark Four â€“ looks promising (table3). Threat comes from competing chains that also positioned their own brand labels targeting the upmarket (eg.TESCOâ€™s â€œFinestâ€) and which can offer their products at lower prices due to economies of scale.
Waitrose is well positioned and in its market segment very competitive. Good progress has been made in setting up an online shopping facility. Waitrose should continue this path, but be careful not to alienate their elderly customer base.
For future growth strategies I recommend a mix of market- and product-development. Next to a constant high standard of products, expansion of the business into the north-west of the UK and (a limited) expansion into the non-food sector is recommended. The partnership with John Lewis will provide expertise and already familiar and tested supply links.
Word Count: 556
Table 1 - Grocery Industry, PEST Analysis
â€¢ Planning Policy Guidance (PPG)*
â€¢ Competition Commission**
â€¢ EU Competition Law***
â€¢ 2001 Market value: 103.4Ðˆbn
â€¢ Relative Recession proof industry
Socio Cultural Technological
â€¢ Organics and healthy eating
â€¢ Eating out & take-away
â€¢ Environmental conscious
â€¢ >Ñ• of shoppers travel by car
â€¢ Communication/ IT
â€¢ Supply Chain Optimization
â€¢ Transport/ Cool Storage
â€¢ Bar Code/ Stock Management
*The Department of the Environment, Transport and the Regions (DETR) (2000): â€œThe Government remains firmly committed to the objectives of PPG6, which seeks to sustain and enhance the vitality and viability of our existing city, town, district and local centres and to make them the focus for retail investmentâ€ â€¦means that it is very difficult to get planning permission for out-of-town stores.
**â€˜The Competition Commissionâ€™s report â€œThe Supply of Groceries from Multiple Stores in the United Kingdomâ€, published in 2000, stated that the leading supermarkets do not operate as a cartel to keep food prices unduly high.â€™3 Although some questionable practices were found (selling product at a loss, lower prices in areas of high competition), the Commission did not recommend any corrective actions.
***EU Competition might not be as generous as the Competition Commission and order changes
Table 2 - Waitrose - Boston Consulting Group Matrix
Relative Market Share
Rate of Market Growth High Stars Question Marks
â€¢ Organic foods
â€¢ Online shopping#
â€¢ Sandwiches & Sushi
â€¢ Indian own brand foods
Low Cash Cows Dogs
â€¢ â€˜Perfectly Balancedâ€™ Own Brand Label Products
â€¢ Wines & Delicatessen
â€¢ Counter sales (Fish, Cheese, Pattisserie, Meat)
â€¢ Frozen uncooked foods
â€¢ Entertainment goods
Table 3 - Waitrose â€“ SWOT Analysis
â€¢ Own Labels â€œPerfectly Balancedâ€*
â€¢ Work Delivery Scheme
â€¢ Fresh/ Quality Food (own farms)**
â€¢ Wide Range of products**
â€¢ Expansion is difficult due to existing store coverage
â€¢ Very dependent
on the performance of own labels
â€¢ Expansion into the north-west
â€¢ Retail Partnerships^
â€¢ Internet shopping (ocado.com)
â€¢ Further exploiting the Non-food sector
â€¢ Mark four stores^^
â€¢ Cheap-chains targeting the high end market
â€¢ Overseas groups entering the market
â€¢ Manufacturers are still seeking to legally slow down the penetration of own brands
*After Marks & Spencer Waitrose was one of the first retailers to develop Own Brands. Own brand lines carry over 16.000 products. In 2001 â€˜Perfectly Balancedâ€™ was introduced, a new range of 117 lines including cereals, sandwiches and fresh meals. It is promoted for a fresh and healthy lifestyle.
**According to a survey by Which? Waitrose is the leading supermarket chain in food quality and range. Only ASDA was rated better than Waitrose for value for money.
#Although an elaborate internet shopping system is in place Waitrose lags behind in this market share in online shopping (3%). â€˜Waitrose incorporated its three existing Internet stations â€“ Waitrosedeliver, Waitrose@work and Waitrose Direct â€“ into an upgraded Waitrose.com portal in August 2001â€™1
Since October 2001, Waitrose was testing its proposed Ocado e-commerce venture, which was developed in conjunction with Last Mail Solutions and will commence when testing has been completed.
^Retail Partnership (see Sainsburyâ€™s and Boots) could be applied.
^^a new store format that will concentrate on even fresher food products
Table 4 - Waitrose - The Ansoff Matrix; Growth Vector Components
Markets Existing Market Penetration Product Development
â€¢ Improve service and quality
â€¢ Expand Own Brand Labels
â€¢ Introduce new products
â€¢ Expand to non-food sector
New Market Development Diversification
â€¢ Internationalising & Globalization^
â€¢ Expand abroad^
â€¢ Expand north-west of UK
â€¢ Online shopping
^Waitrose has indicated that they are not interested into expansion abroad
1. Keynote, 2002, Supermarkets & Superstores, Market Report
2. Keynote, 2001, Own Brands, Market Report
3. Keynote, 2001, Supermarket Services, Market Assessment
4. Keynote, 2001, E-Commerce: The Internet Grocery Market, Market Assessment
5. Keynote, 2001, Home Shopping, Market Report
6. Keynote, 2002, E-Shopping, Market Assessment
7. Keynote, 2002, The ABC1 Consumer, Market Assessment
8. Mintel, 2002, Home Shopping in the UK
9. MAI, 2000, Supermarket Own Labels
10. Waitrose environmental Report
11. John Lewis Partnership plc, Reports & Accounts