Waitrose seeks Scottish growth SUPERMARKETS: INCOMER

0 Comments | Sunday Herald, The, May 28, 2006 | by Julia Fields Senior Business Writer

ALASTAIR McKay, deputy chairman of Waitrose owner John Lewis Partnership, refuses to be intimidated by the dominance of his rivals.

Battling for a space in a marketplace crowded by Tesco, Asda, Sainsbury's and Morrisons has yet to defeat Waitrose down south, he declares. And it is not about to prevent the Bracknellbased chain from stealing a march on Scotland.

"We're not going to be scared off by competition. Competition is healthy. A balanced approach to a shopping offer is important. Customers deserve choice, " the 60-year-old executive says.

The residents of Morningside and Comely Bank in Edinburgh, have, by many accounts, been waiting with bated breath for that choice to come.

Waitrose's delectably fresh produce has reached legendary status in dinner party circles, even if it often comes with premium price tags. In the past nine weeks, the chain has signed up 45 new local suppliers and it will sell an additional 400 Scottish product lines in the two Edinburgh stores.

In many cases, Waitrose is dealing directly with the farmers. Its herbs will be grown in Dundee, its vegetables in Cupar, its eggs will be laid in the Borders and its beef will come from producers in Dumfriesshire.

McKay says that the Edinburgh stores will act as a potential springboard for suppliers to have their products carried down south, but also throughout Scotland as Waitrose expands in the country.

For the past few years, Waitrose has been keen to shake off its association as a supermarket for wealthy shoppers from the southeast. While Waitrose currently only has a 3.7 per cent market share of the grocery sector, it has ambitions to become a national chain and moving into Scotland is an important part of realising that goal.

The retailer has been looking at sites in Glasgow, although no commitments have yet been made.

"We continue to look for sites in other parts of Scotland to broaden our portfolio, but more importantly bring what we think is a unique offering to the marketplace, " McKay says.

"Glasgow, it is fair to say, is an obvious target. It would be easy to deliver the supply chain requirements for Glasgow.

But that doesn't rule out other places like Inverness or other cities and towns north of Edinburgh and Glasgow."

McKay, who is originally from Inverness, is particularly enthusiastic about the recent expansion into Scotland.

"We're getting closer to where I'm from originally, " he says, noting that he and his wife could very well return to Inverness for their retirement.

He is also proud of including another 244 Scottish employees in the John Lewis Partnership business model.

The newest Waitrose employees will become partners in the company and enjoy their share of the profits distributed out as a bonus every year.

The John Lewis group said in March that it would pay staff a 15 per cent bonus, equivalent to eight weeks' pay, after posting strong annual results for both Waitrose and its John Lewis department stores.

McKay, a former fighter pilot with the Royal Air Force, joined the John Lewis Partnership at age 44. "They had openings for senior manager trainees. They were prepared to take a risk on people from other industries, " he says.

"I could see a lot of parallels between the RAF and John Lewis. It is a company with good discipline, it has good quality people and the business structure is very attractive."

But whether Waitrose will be able to push forward a Scottish presence of any real scale remains to be seen.

Waitrose only made inroads into Scotland in the first place because Somerfield sold two of its Edinburgh stores. Sites to build new stores are in short supply and the small chain will have to compete against the vast capital resources of Tesco, Asda and Sainsbury's to buy land.

The Competition Commission is currently investigating whether or not some of the big players have been involved in amassing and sitting on landbanks with the intention of keeping out competitors.

McKay refused to be drawn on whether he believed this was indeed a problem. He would say only that he hoped that the Commission inquiry led to a fair set of criteria established for planning permission and the ability for companies to grow their business organically in a fair way. He added: "If we didn't have confidence that there were sites in Scotland, we wouldn't be looking."