Waitrose "giving customers power to choose offers they want"

Waitrose "giving customers power to choose offers they want"

UK grocer Waitrose has got industry watchers talking this afternoon (17 June) with the launch of a promotional programme that lets consumers choose which products they want to buy on offer. Rivals and suppliers will be watching very closely.

The UK is one of the world's most promotional FMCG markets but there has long been talk of deal fatigue among shoppers becoming more mistrustful of the offers available. The less complex pricing architecture at Aldi and Lidl is seen as one of the factors in their rising popularity in recent years.

With its Pick Your Own Offers programme, announced today, Waitrose is trying to appeal to shoppers by, it said, "putting consumers in the driving seat".

Members of the myWaitrose loyalty scheme will be able to select online ten items from a list of nearly a thousand branded and own-label products on which they would like to save 20%. Each time the consumer buys one of the products in-store or online, the discount applies. The shopper's selection will be fixed for a set period. Waitrose said the first selections "will remain in place until the end of summer".

Waitrose MD Mark Price said: "This is a ground-breaking move giving customers the power to choose the offers they want. Different forms of personalised marketing have been around since the 1990s, but we’re introducing mass customisation in grocery."

That Waitrose is not opening the offer to all shoppers is canny - and could lead to more occasional customers signing up to the myWaitrose scheme.

Rivals will be watching closely. As consumers in the UK have become more promiscuous, retailers have frantically sought to win over consumers, with a flood of vouchering and with price-comparison schemes, although that has left some shoppers questioning how much they really save, adding to the allure of Aldi and Lidl.

The majors have moved again, with deep investment in prices and some efforts (in a nod to competition from pound stores) to round-pound prices but the multiples are still seen as places of promotional noise, even if, the boardrooms of the Big Four would say they are easing a touch on promotions.

Loyalty schemes have been in the spotlight. Morrisons has joined the fray with its Match & More card, but Sainsbury's has rowed back a touch by halving its Nectar card rewards to fund lower prices.

"Aside from basically everyday low pricing, which is the default for the discount segment, Waitrose is in a novel manner addressing what has been an important issue for the industry and that is consumer trust," Shore Capital analyst Clive Black wrote in a note to investors today. "All of the supermarkets are trying to deal with this in different ways, most through aforementioned price reductions and an easing of promotional participation plus banners and messages that state motherhood and apple pie - 'we listen to our customers' and so forth. Whilst requiring a log on, the Waitrose programme genuinely empowers its shoppers and we will be intrigued to see what traction it gains and how it ripples around the trade."

Suppliers will be eyeing the initial impact of the scheme. The initiative could give Waitrose a mine of data on what products are being chosen (and what aren't) and where shoppers want offers most. For Waitrose and for manufacturers, that could remove some of the guesswork from where to spend on promotions, potentially improving return on investment.

"If Pick Your Own Offers gains traction then suppliers will be queueing to gain insight and fund; it could make their own promotional spend much more efficient," Black says. "One of the major pitfalls of promotions is that they can be hugely ineffective and inefficient."

News of the Waitrose scheme came on the same day one rival, The Co-operative Group, announced it was ploughing GBP125m into prices, underlining just how the incumbent grocers are intensifying their response to Aldi and Lidl.

But could Waitrose gain an edge with its new personalised promotions?