Retail Newsagent went undercover with retail analyst and shopper psychologist Phillip Adcock to unearth the multiples’ best strategies, worst mistakes and the opportunities they offer your store.  In part 1 and 2 they visited Tesco and ASDA respectively In the final instalment they visited Waitrose to find out some of the secrets of the premium supermarket

We conclude our mission in the more sedate atmosphere of the grocery arm of the John Lewis Partnership. Waitrose has an established corner of the market as the UK’s premium supermarket, with aisles filled with premium brands that other supermarkets shun, or niche products that only specialist stores would think to stock.

“People come to Waitrose to get nicer things,” says Mr Adcock – pointing out Barry Norman’s picked onions as we walk down an aisle filled with jars and condiments.
“You can’t get these products in Asda or Tesco, which allows Waitrose to charge more,” he says.

A business model like this might seem out of step with these austere times, but just as premium range is becoming a must-have for many independent retailers, so Waitrose is continuing to buck the wider economic trend. In fact, in September this year the company posted profits 28.9% higher than the previous period and sales have gone up by 2.2% in the past year. It’s particularly impressive when Tesco is struggling so publically.

That sense of quiet confidence infiltrates almost every section of the store. Where Asda’s aisles seemed narrow and high, the spacious routes around this Waitrose made the experience the most enjoyable of the three. The sense that you’re not being rushed out of the store, that staff will be happy to help – albeit only if you approach them – is closest to that shoppers expect from a local community store of all the stores we visit.

“Waitrose does the basics well. They don’t put everything on promotion; they only have a small seasonal aisle. I think the message from today is that the convenience retailer should try to be most like Waitrose,” says Mr Adcock.

A bold statement, but the company’s figures mean retailers across the country could benefit from ‘getting the basics right’ like Waitrose does.
With our mission complete, we leave with minds full of lessons learned from all three stores. Our day of espionage has revealed the multitude of opportunities which independents can capitalise on that you have seen here – those that involve copying the supermarkets’ most successful and clever strategies and those that involve understanding their weaknesses and adopting the opposite approach.

One final impression was that, throughout the whole day, at none of the supermarkets we visited did anyone appear to be interested in our presence. Their functionality is one of their greatest strengths, but the warm hospitality offered in independent stores is one of yours. Whether your customers are the chatty regulars you recognise every day or the more anonymous passing trade, never underestimate the power of this quality in your business.

 

SHOPPERS ARE LOYAL TO THEIR FAVOURITE STORES

All three stores on our visit are close together and have in common their warehouse-like size and huge car parks, so how can so many stores exist so closely? Because each caters for different demographics, says Mr Adcock. An Asda shopper is unlikely to contemplate visiting a Tesco, just as a Morrisons shopper would be unlikely to switch to a Tesco or Asda. It also helps to explain the success of Waitrose’s ‘Essentials’ range, which allows consumers to keep shopping at this more premium store while cost-cutting. “But a few years ago Sainsbury’s ran a disastrous price-led campaign. It essentially tried to grab a lot of customers from the other multiples and ignored the ones it had. That was a big mistake.”

WHAT CAN YOU DO?  Build loyalty to your store by understanding your customers and stocking a range of products and offering services that cater specifically to them. Make sure you have your own point of difference.

 

EFFECTIVE LIGHTING DRIVES SALES

Mr Adcock is impressed by a well-lit Max Factor display in Waitrose which he says compares favourably with units in convenience stores where lights have been switched off to save money. “That creates the impression the unit is broken and therefore that the store is run down,” he says.

WHAT CAN YOU DO?  Make sure your lighting is in good working order – in display units and on ceilings. Go one step further and install spotlights to highlight products.

WINE WORKS AT WAITORSE

Waitrose’s wine range is split into a standard and an extensive specialist section. Mr Adcock says this arrangement comes into its own when the customer is looking for a bottle as a gift or to take to a social event. “One aisle has the cheaper bottles but they’re not special enough, so the customer looks at the specialist wines. The big centrally positioned price tag there is £10.99, but that looks cheap because they can see other bottles around it at £26 or £30. They think they’d therefore better get one for £18. Suddenly the display has made the customer pay an extra £10.”

WHAT CAN YOU DO?  Recreate this effect by using a special display stand which will draw in consumers to the premium part of a range where higher prices can encourage consumers to trade up.

 

INDEPENDENTS CAN LEARN SEASONAL LESSONS FROM WAITROSE

All three stores are in full swing for Halloween when we visit. According to its chief executive, Tesco wants to bring the “heart and soul” back into its business and Mr Adcock thinks it is using seasonal areas of the store to do just that. Watford’s store contains displays for Diwali, Halloween and Christmas. While the Diwali area seems unfocused and untidy, with products like tinned fish and confectionery sharing space, Halloween is more effective as a display area. Filled with decorations, confectionery and children’s costumes, the different categories work far more coherently together. Add to this inventive merchandising and some spooky music and the area is a tangible example of how Tesco is evolving. In Asda’s two Halloween aisles, it’s clear equal effort has been made, with stronger results. While mums are busy looking at the table decorations and kids’ costumes on offer, their children sit happily on the floor, playing with a spooky interactive design which completes the aisle’s Halloween theme. “Asda has had real success in getting kids to engage with this stuff,” says Mr Adcock: “It’s getting known for it.” Interestingly, Waitrose gives not nearly as much space for its Halloween offering, with just one bay by the newspapers at the front of the store. But Mr Adcock says this kind of focus is exactly the approach he’d recommend independents take. “Independent retailers should be making a lot more out of fun size products, but not trying to copy the biggest stores.”

WHAT CAN YOU DO?  Take a leaf from Waitrose’s book – create small, engaging seasonal displays with items that are perfect for last-minute purchases.

 

SUPERMARKETS STRUGGLE TO CROSS MERCHANDISE

Waitrose, along with Marks & Spencer, has created popular £10 meal deals. But asked why multi-category merchandising isn’t more widespread, Mr Adcock says it exposes one of the structural limitations of larger supermarkets. “We all know that mixing categories works really well, but these shops just can’t do it in many sections. Which product gives space up for Halloween? Does the confectionery buyer give some of his space to make room for a costume? Does the dressing-up guy give up some of his space for confectionery?” It’s only possible if new space is created, he says.

WHAT CAN YOU DO?  It’s really easy for independents to link-sell products. Group lunch or dinner components together, or display alcohol with cheese, confectionery or snacks and DVDs to maintain a point of difference and offer value.