Waitrose is closing seven supermarkets as it undergoes its second round of store reductions this year, in a move that puts nearly 700 jobs at risk.
Three supermarkets, in Bromley in London, Oadby in Leicestershire and Wollaton in Nottinghamshire, have been sold to Lidl in the latest sign of the changing grocery market being radically shaken up by fast-growing cut-price chains.
Lidl and its fellow German discounter Aldi are drawing in middle-class bargain-hunters as well as those on a tight budget, overtaking Waitrose to become the UK’s 5th and 7th largest grocers, controlling nearly 14% of the market, according to analysts at Kantar, up from about 10% only three years ago.
As well as the sales to Lidl, Waitrose is selling a fourth store, in Sandhurst, Berkshire, to another unnamed buyer while the group’s sites in Marlow in Buckinghamshire, Stevenage in Hertfordshire, and a convenience store at BA headquarters near Heathrow airport, will all close down in the autumn.
A total of 677 staff are affected. The employees are being consulted on the changes, with options including potential redeployment within the group. No staff are expected to transfer to the new site owners.
Mark Gifford, Waitrose’s director of shop trade, said: “We haven’t taken this decision lightly but we have to do what’s right for the business as a whole. Thanks to the hard work of all our partners we’re making good progress and Waitrose & Partners is on track for profit growth this year but, despite the best efforts of everyone involved, we haven’t been able to find a way to make these shops profitable in the long term.”
The latest closures come after Waitrose sold off five unprofitable shops in March, with the loss of 440 jobs. Those supermarkets, in Torquay and Teignmouth in Devon, Barry in Glamorgan, Ashbourne in Derbyshire and Blayby in Leicestershire, closed last month. Five other shops were closed last year.
Waitrose is cutting costs amid tough conditions on the high street. Earlier this year the supermarket’s parent group, the John Lewis Partnership, slashed its staff bonus to the lowest level in 66 years after a disastrous year for its department stores, which resulted in a 45% slump in the group’s annual profits.
Waitrose profits rose 18% over the year, and the company expects profits to rise this year, but it is also being forced to invest heavily in its online grocery service as it prepares to end a long-term distribution deal with Ocado next year. Waitrose is aiming to treble the size of its online business to £1bn annually following the end of its Ocado deal in October 2020, by teaming up with one of the grocery delivery specialist’s co-founders, Jonathan Faiman.
The retailer, which has 344 stores in the UK including 61 “Little Waitrose” convenience stores, has said it will compete with bigger rivals by focusing on differentiation, adding better services and more innovative products, rather than trying to become bigger.
Trading has been tough for supermarkets so far this year as they face rising costs and poor sales compared with 2018 when they were helped by a long spell of warm weather and a string of set-piece events including the Royal wedding and England’s success in the football world cup.
Sales have fallen by 0.5% in the first 24 weeks of Waitrose’s financial year with both food and homewares affected.
Bryan Roberts, insights director at grocery analysts TCC Global, said Waitrose’s closures mirrored similar moves by traditional rivals including Morrisons, Sainsbury’s and Tesco in recent years as they tried to cut costs amid pressure on price from Aldi and Lidl.
“Everybody apart from Aldi and Lidl is having to be more rigorous in getting rid of the runts of the litter that are not pulling their weight because of local competition or just a bad location. Lidl is going to be more confident that it can make these sites work as there is a lot of untapped demand for both Lidl and Aldi. Our research shows a lot more people would shop there if they could, but they have to drive [a long way] to get there.”