These are challenging times for Waitrose and its parent company the John Lewis Partnership, which today revealed it had plunged to a £92m first-half loss.

The results painted a worrying picture for the upmarket grocer. Despite an avowedly middle class customer base, It is being hit hard by the cost of living crisis.

In the six months to July, Waitrose saw its customer numbers increase by 6% but like-for-like sales fell by 5% to £3.6bn, with average basket values falling by 18%. 

So it seems safe to conclude that inflation (which the ONS recorded this week at 9.9%) is hitting Waitrose shoppers just as hard as anyone else. And, as well as stocking up on more budget lines (70% of baskets now contain at least one Essential Waitrose product, it noted), they are looking elsewhere as a means of saving money.

While shoppers are clearly not abandoning Waitrose altogether, this trend, at the same time as Aldi’s glorious ascent into the big four, is a huge cause of concern for Waitrose executive director James Bailey and the wider JLP leadership.

On the plus side, sales are still 7% higher than pre-pandemic levels on a like-for-like basis. And Bailey suggested today that Waitrose benefited more during the pandemic from shoppers looking to do a big weekly shop. As patterns normalised with more top-up and impulse shopping, it was always going to suffer by comparison.

He suggested today that had Waitrose more than “a handful of urban convenience stores” then we would likely have seen a more positive sales picture. The comments probably won’t herald a fresh wave of Little Waitrose stores popping up, but I would expect to see a ramping up of the more capital-light wholesale approach to the convenience channel.

The big question that still remains is price – Waitrose is now in a space all of its own when it comes to pricing, even more so as we have started to see M&S shift from the premium to the everyday in terms of range and pricing.

So what is Waitrose going to do about it? Well don’t expect any short-term price lock type campaigns with hundreds of promo stickers all over the shelves. Bailey described such initiatives as “often just smoke and mirrors”.

Quality is a “red line”

Equally, we are not going to see Waitrose compromise on its product specification or sourcing standards as a way to lower prices. Waitrose quality, says Bailey, “is a red line” that he will not cross. “We can only ever be successful in the market by being the best version of ourselves we can be,” he insisted.

It is a bold stance and one for which he should be applauded. Times are tough, no doubt about it, and there is currently no end in sight to the current crisis. Bailey said himself earlier that “we have not run the road yet” when it comes to inflation. But Waitrose will be in a better place if it can emerge on the other side without having been swallowed up by the pack on quality.

As a result, instead of compromise, it appears Waitrose is set to double down on its differences – there is apparently a lot more to come in terms of the recently revamped MyWaitrose rewards scheme in the second half of the year. Bailey hinted at a return of some of the elements that have previously proved popular with customers: could we see the return of free tea or coffee?

And as well as 60 new products this Christmas, Waitrose is set for a brand relaunch in the next couple of weeks. Details are scant right now, but it will see “an even sharper focus on quality, service and sustainability”.

Bailey said the relaunch would set out “who we are and who we are not” and that it would be “more punchy and more modern” than what has gone before. He says this will be more challenging to the market as whole – in essence, it sounds like it is set to come out swinging, which can only be a good thing. This is the time to be shouting one’s USPs from the rooftops. 

Shoppers need to know why Waitrose is more expensive than other retailers and to be able to make an informed choice. In the past it has been too shy, too subtle, maybe even too clever by half in some of its marketing. Now is the time to be brave, to be bold and to meet these challenges head on.

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