How Waitrose is fighting a middle-class price war. Store boss James Bailey reveals he’s looking forward to his most profitable year in a decade as he raises the bar in the race to become Britain’s most loved supermarket

For six-year-old James Bailey, Waitrose was a rare source of exotics in Eastbourne in the 1980s. He says: ‘It felt like another world when I went with my mother. There was always food you hadn’t seen before: chicken kiev, hummus and taramasalata.’

More than forty years later, he is now the boss of the chic grocer – and he is still fixated on products that are slightly different.

From celeriac remoulade to strawberry jam and pink champagne, it’s that gastronomic touch that sets Waitrose apart from the rest.

He recently added 1,000 lines in a move that is expected to produce the company’s most profitable year in a decade. But as the cost of living crisis has caused food prices to rise by 25 percent, the pressure is being felt even in the aisles of the average middle-class grocer, where customers have traded in branded items for private labels and back to pinot noir.

“You can’t be disconnected from reality,” says Bailey, 50, speaking from the 2,800-acre Leckford Estate in Hampshire, which has been managed by Waitrose since 1929 and now supplies the company with dairy, fruit, wine and rapeseed oil. The supermarket is the only one in Britain to own its own farm.

‘There will be less really unusual and esoteric, and more focus on investing in everyday basic things. We just introduced Wagyu steak, the best quality on the market. But at around €12 per portion it is an accessible price.’

Waitrose is part of the John Lewis Partnership, the UK’s largest employee-owned company.

Former Tesco director Jason Tarry took over from Sharon White as chairman of the partnership last month. Given his background, surely he will have some thoughts on Waitrose?

“Jason is a brilliant retailer with a real affinity for the partnership model and our brands,” is Bailey’s only comment on the matter. Selling premium goods while remaining competitive while price wars rage everywhere is a good balance. Even more so now that Tesco has stimulated investment in its ‘best’ range and M&S is raising the bar even higher.

For now, it’s full steam ahead for Bailey. A £1 billion investment to expand and upgrade the 314-store estate over the next four years will see the number of Little Waitrose convenience stores double in number to 100.

Another 25 regular stores will also be created. But the locations have yet to be confirmed, so it’s unclear whether they’ll stray beyond the southeastern part of the chain.

Based in Essex, Bailey spent 18 years at Sainsbury’s, rising to purchasing director. He joined Waitrose in 2020 at the height of the pandemic, which culminated in cost-of-living issues. It has been a tough time for Waitrose and the John Lewis Partnership in general, which made a £234m loss in 2022, although it has since returned to profit.

Market researcher Kantar found that Waitrose sales rose 3.6 percent year-on-year in the four weeks to the end of September.

The market share has increased to 4.6 percent in the past two months. Sales of the premium ‘Waitrose No.1’ range increased 34 percent year-on-year, with coffee and confectionery performing particularly well.

Current Waitrose customers mix their shopping across several other supermarkets. Younger shoppers, Bailey says, are attracted to the brand’s ethical features.

He is acutely aware of customer expectations, which means unwavering attention to detail.

Most competitors have closed their meat and fish counters in stores in recent years. Waitrose, on the other hand, will upgrade the counters in 262 of its stores.

Dealing with “someone who cares about the food and can give advice is a really important part of welcoming, personal service,” he says.

BAILEY is also investing in more self-service checkouts. This is controversial because some customers dislike them and they have also been cited as a factor in fueling the increase in supermarket thefts.

Booths, based in Preston, Lancashire, and nicknamed the Waitrose of the North, axed almost all of its self-checkout stations in November last year after a customer revolt. Bailey says this is not a rebellion he recognizes at Waitrose. In fact, he credits the speed and efficiency of self-service checkouts for bringing in two million additional customers in the past two years.

He says: ‘There is clearly a vulnerability. Some people don’t scan properly, either accidentally or on purpose.’

However, when it comes to crime, he says he is much more concerned about the safety of staff. He cites a 15 percent increase in reported gun attacks this year by organized crime gangs.

‘We have invested heavily in security including CCTV, body-worn cameras and public displays. But in some stores there is still the threat of brutal and aggressive gangs,” he says.

“It’s a sector-wide problem that needs industry cooperation before it gets worse.”

For Bailey, there are big questions about the role of supermarkets in food production. Critics accuse supermarkets of prioritizing short-term profitability at the expense of farmers and the environment.

However, Bailey says grocers can be an agent of change.

He says British agriculture has a leading reputation in the world and is strong in exports.

These, he believes, could be ‘turbo-charged’ through less reliance on intensive agriculture and a move to regenerative land management.

Regenerative agriculture places greater emphasis on soil health to make it more productive, and addresses issues such as topsoil erosion – the loss of the most fertile soil layer. With organic farming, it can reduce carbon dioxide emissions and promote biodiversity. Plans are underway to have the 2,000 farmers who supply Waitrose operate in this way within ten years.

Bailey admits that the cost and time required to adapt can be prohibitive. Farmers need support to reduce the financial risk of the move and awareness among customers is low.

“If you asked a hundred people what they knew about regenerative agriculture,” he says, “I doubt many would be able to explain it.

‘Twenty or thirty years ago we didn’t think much about how chickens were raised or where they laid eggs, until a few pioneering supermarkets decided that there were no more battery hens.

‘Sometimes you need the industry to get things moving, give customers better information and take the lead.’

Meanwhile, the countdown to Christmas has begun – the season that ‘plays to Waitrose’s strengths’.

The festive advert was filmed the week before we spoke and he is obviously tight-lipped about its content and who the lead actor is.

“I hope customers are more optimistic this year than last Christmas,” he says. ‘Living standards are rising again and it is the most exciting time of year for selling the best food in the world.

‘I already have my favorite for the festival season; shrimp and crab cocktail – it’s delicious.’