Less than three months after revealing the end of its partnership with Ocado, Waitrose has outlined plans to treble the size of its online grocery operation to a £1bn business over the next three years.
To support its plans, the group is linking up with Today Development Partners (TDP), a new technology business headed up by Jonathan Faiman, one of the original founders of Ocado, and Mo Gawdat, the former Chief Business Officer of Google’s innovation arm.
With TDP’s help, Waitrose is planning to develop three state-of-the-art automated Customer Fulfilment Centres (CFCs), while harnessing new technologies to improve service for online shoppers.
Waitrose currently fulfils online orders through a combination of store picking and its CFC in Coulsdon, which opened in 2015. It has already revealed plans for a second CFC to serve the North London area.
The retailer’s development of its online operations will be led by Ben Stimson, who is currently Retail Director. He has now been appointed to the new role of Digital Director, tasked with delivering its plans and managing the relationship with TDP.
Rob Collins, the chain’s Managing Director, commented: ‘Waitrose.com is a popular and efficient home delivery service that is already growing strongly ahead of the market. The plans announced today represent a clear commitment to achieve rapid step-change in Waitrose.com’s capacity and capability as we build a modern, well-invested digital business that is fit for the future.”
Faiman added that the plan was deliver “the world’s best digital home delivery service,” whilst Gawdat said: “With the advancement in technology and with Waitrose.com as our partner we aim to make the experience of using this technology a great experience for the customer.”
Waitrose’s long-standing supply deal with Ocado is due to end in September next year when the online supermarket officially begins its new joint venture with Marks & Spencer. Analysts have suggested that Waitrose could benefit from Ocado’s switch to M&S products if customers loyal to the Waitrose brand defect to its own grocery delivery service.
Brereton, Retail Analyst for GlobalData, commented: “Waitrose’s new partnership with TDP will provide it with the capacity needed to compete in an increasingly competitive online food & grocery market, potentially doubling its share of the market to 5% by 2022 – a resilient move in the face of the termination of its supply deal with Ocado next September. This appears a shrewd strategy, with GlobalData forecasting the online food market to grow 29.1% to £19bn by 2022 – significantly faster than the 8.8% growth of the whole market over the same period.
“But although the promise from new partners TDP to build three customer fulfilment centres (CFCs) using ‘state-of-the-art technology’ puts Waitrose on a more even keel with Ocado with respect to logistics and capacity, it will take an equal effort to widen its customer base to achieve such an ambitious target. Ocado has a significantly more established online presence, with its share of the online food & grocery market expected to reach 10.7% during 2019 – fourth behind Tesco, Asda and Sainsbury’s.
“For Waitrose to succeed, it will need to rely on brand loyalty and the associated quality to ensure that it lures as many customers as possible from Ocado when the existing supply deal ends in 2019, and must ensure that it has established unique product ranges to encourage current Ocado shoppers to follow the Waitrose brand rather than accept the changes to M&S products.”
NAM Implications:
- Waitrose are taking online future seriously….
- …are you taking their ambitions as seriously…
- …and building capability to match?
