Waitrose may have become a byword for the well-heeled British shopper, alongside middle-class stalwarts like Marks & Spencer and PizzaExpress, but yesterday it admitted that even its customers were counting the pennies.
The John Lewis-owned supermarket chain has introduced a new value range and said that, alongside the choice cuts of sirloin and lamb, "forgotten" alternatives such as pig cheeks and beef skirts were helping to ensure that customers did not switch to cheaper rivals.
Mark Price, managing director of the supermarket chain, said that goods sold on promotion had risen "substantially", from 16 per cent to 23 per cent.
Waitrose, Britain’s sixth-largest grocer, reported 0.4 per cent like-for-like growth for 2008 – well below growth reported by its "big four" rivals, but better than recent performance by Marks & Spencer, its premium rival.
Waitrose lost market share last autumn as shoppers deserted it for cheaper rivals. Its share of the grocery market slipped slightly from 3.6 per cent to 3.5 per cent in the 12 weeks to February 21. Its new "Essential Waitrose" discount range is intended to ensure that customers remain loyal to the store as the recession deepens.
Mr Price said: "There are not customers leaving us, as has been reported. [The decline in sales] was because of customers down-trading in Waitrose.
"One of the great challenges we face is that consumers think we’re 25 per cent more expensive than Sainsbury and Tesco. That simply isn’t the case."
Independent research commissioned by Waitrose found that it was 3.2 per cent more expensive than Sainsbury’s, its nearest big competitor in terms of price perception.
In the face of the recession, Waitrose has attracted an extra 160,000 customers a week, it claimed. Mr Price said: "We have seen quite an influx from M&S, as you might expect."
Waitrose said that it had also gained from a growing trend for customers to dine out less. Beer, spirits and tobacco sales rose 8 per cent last year. The supermarket invested £47 million in reducing prices last year.
Pretax profits across the employee-owned John Lewis Partnership fell by nearly 20 per cent to £407 million.
John Lewis staff gathered at its Oxford Street store yesterday to learn the level of their annual bonus. Cheers rang as a 13 per cent dividend, better than expected, was revealed, despite it falling short of last year’s 20 per cent bonus paid for 2007.
The group said yesterday that it was braced for a tough 2009. Charlie Mayfield, chief executive of the John Lewis Partnership, said: "The fact is that conditions remain very difficult. The things making it hard last year are still with us. There is still uncertainty for customers, still not a lot of liquidity for banks, so all these things are conspiring to depress trade.
"Consumer confidence is low, frankly, and that’s where conditions will remain into the second half. We’re preparing for a tough trading year."
John Lewis raised the prospect of back-office job cuts, as it said that it was in consultation with partners on reducing support staff. It wants to cut the proportion of non-customer-facing staff from 44 per cent.
Andy Street, managing director of John Lewis department stores, said that its expansion plans had been held up by the crisis in commercial property. This has delayed the development of shopping centres in which John Lewis had hoped to take space.