Waitrose pulls plug on TDP eCommerce partnership

The John Lewis Partnership (JLP) said today (12 September) that it has decided not to progress Waitrose's eCommerce partnership with Today Development Partners (TDP). 

The supermarket chain announced in May that the two companies would team up to help treble the size of the Waitrose online grocery business to a £1 billion operation over the next three years. It represented a statement of intent from the retailer in the wake of notice being given on its long-term product supply deal with online grocer Ocado.

But in JLP’s half-year report, the retail group said the plan is now to “pursue our online ambitions utilising existing expertise across the partnership”. It is still targeting the £1 billion sales landmark.

The change in approach comes as operating profit at Waitrose increased by £14.1 million to £110.1 million in the six months to 27 July, although the bottom-line improvement was mainly due to property sales. Revenue dropped by 0.7% to £3.17 billion.

Department store chain and Waitrose sister company John Lewis reported a 2.8% drop in year-on-year revenue to £1.62 billion.

Online sales at Waitrose outperformed the wider market, growing 10.7% year on year, but this was a rare positive for JLP in a report where the partnership revealed an overall loss of £25.9 million for the period.

The loss was attributed to subdued consumer confidence, which has affected the home and electricals departments at John Lewis, and significant investment in IT and non-management-level staff pay.

JLP has adopted a strategy of growth through differentiation as opposed to scaling the business and opening new stores, and it announced the extension of several new services in the half-year report. The option for John Lewis customers to order online and pick up in six Co-ops and eight Booths shops will be extended to a further 50 Co-op shops before the end of October.

The impact of the UK’s imminent departure from the European Union (EU) looms large over many retailers, and JLP chairman Charlie Mayfield said: “Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact.”

He confirmed JLP has taken steps to prepare, including foreign currency hedging, building stock levels where it is deemed sensible to do so, and improving customs readiness.

“However, Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period,” Mayfield added.