Is the Waitrose of the north about to become just that?

Ten years ago, Edwin Booth sniffed at comparisons between his family-run business and Waitrose. “Waitrose is how a supermarket would be if the civil service ran it,” he bristled. “Booths has a slightly more human face.”

The 62-year-old chairman and now CEO had a point. Over the past 170 years, Booths has proudly traded on its family ownership. But all that looked to change this week, with Booths reported up for sale for £130m-£150m. Suddenly the brand was linked with potential corporate buyers such as - yes, Waitrose - and perhaps the epitome of a faceless corporation, Amazon. So why the sale? And could we really see an American takeover of a well-loved British heritage brand?

One issue is succession. With CEO Chris Dee quitting earlier this year, it exposed again the lack of a next generation Booth to take over at this notoriously disparate family business. Then there’s trading. It’s a lot tougher than it used to be. And it’s also had more than its fair share of bad luck: three of its top-performing branches were hit by Storm Desmond in December 2015, leaving its Keswick store out of action for 15 weeks. Booths estimated the damage depressed yearly sales by 1.4%, leading to a 0.7% drop in revenue to £276.6m for the year to March 2016, while pre-tax losses of £6.1m were further affected by the poorly timed cost of opening four new stores, and £1.6m of restructuring costs (involving 100 senior management redundancies, alongside the closure of six branches). The grocer is yet to publish results for 2016-17, but it is still likely finding it tough.

Jonathan De Mello, retail consultant at Harper Dennis Hobbs, believes some new Booths stores are struggling to deliver. “There’s talk about them not doing well in some of the new locations,” he says. “Some have tiny populations and they need footfall and an affluent customer base.” On the flip side, Booths stores don’t tend to do well in towns that are big enough to attract competition from the big four and the discounters. But De Mello admits “there aren’t many towns” that fit those criteria.

“There’s talk about them not doing very well in some new locations”

Yet he still sees Booths as a business with plenty of potential. He believes a buyer could help Booths fulfil its ambitions to open stores in the north east. Plus, he points out Booths is doing well in concessions - it is believed to be thriving in Newcastle department store Fenwick, which it entered in June, and also has a supply deal with Jasons Food Hall in Malaysia. De Mello believes Booths’ listing on AmazonFresh last month could also be a smart way to introduce the brand to the “time-pressured and affluent shopper” in London and the South East. “They’re thinking of innovative ways to reach the wider consumer base, but the way they make money is physical stores so they’re going to have to take the plunge and open in the north east,” he says.

A historic relationship

Which brings us to the key question: who has the will and cash to acquire the Booths brand? The most obvious contender is Waitrose. The chain made an unsuccessful bid for Booths 10 years ago and its unofficial nickname - ‘Waitrose of the north’ - still makes it an undeniably good fit. But since the failed bid, Waitrose has expanded further north (it even pointedly established a store in Booths’ home town of Preston in 2012, with other locations including Knutsford, Chester, Charnock, Altringham, Formby and Sandbach), though that still leaves lots of gaps. The 28-strong chain could give Waitrose a foothold in affluent areas such as the Lake District.

Yet there is a strong question mark over whether Booths will carry the same appeal for Waitrose as it did a decade ago. “There is that historic relationship: they had a joint buying agreement,” says De Mello. However, he points out £130m is a hefty investment at a time when Waitrose is focusing its cash on improving trade in its existing stores.

Shore Capital analyst Clive Black is also dubious. “We sense John Lewis may be a little resource-constrained so maybe the apparent lead player is not in pole position.”

All of which has pushed another name into the frame: Amazon. On the face of it, Booths may be an attractive way to grab share in the UK grocery market. Similarly to Whole Foods, Booths resonates with the online giant’s target high-end consumer - and Edwin Booth’s daughter Emma is working at the online giant.

However, Planet Retail analyst Natalie Berg believes a buyout is unlikely. “The big red flag that will ultimately put off Amazon is Booths’ location.”

Simply put, Amazon is looking for stores that would work with AmazonFresh. Booths branches in locations such as the Lake District hardly fit with its urban-focused model. Berg points to the closure of the two Whole Foods branches outside London as evidence.

Outside these two obvious buyers, it’s hard to say who would swoop. HSBC analyst Dave McCarthy points out a store-based business is no longer quite such hot property as it was a decade ago. “Scale is always important but whether people want more space at the moment when there’s arguably too much is another thing,” he says. Black believes “all and sundry” will run the slide rule over Booths. “Time will tell but with the news seemingly out in the open, Booths will want to press on.”