Expanding Waitrose’s Business Into Singapore: Market Research Report

Waitrose: Overview

Waitrose is one of the biggest chains of supermarkets in the UK. It is the food retail division of UK’s biggest employee owned retail business, John Lewis Partnership. It had 352 branches across the country, including 30 ‘Little Waitrose’ convenience stores as of February 2015. The supermarket has been able to capture 5.1% share of the British market, which makes it 6^th largest grocery retailer in the county (Waitrose.com 2018). The biggest competitive advantage of Waitrose is the royal warrant for supplying groceries, spirits and wine to Queen Elizabeth II, that is, to the royal palace and since 2011, to Prince Charles. This has given the company an up-market status in the country.

Apart from having huge number of domestic stores, Waitrose has its business partners in many countries across the world, including Dubai, in the Middle East. It operated in Falkland Islands, Hong Kong, Chile, China, Australia, Bermuda, Barbados, Kuwait, Azerbaijan, Caribbean, Malta, Ghana, and longest operation occurred in Isle of Man. In Singapore, they have been operating in collaboration with Cold Storage supermarkets (Lees 2014). However, Waitrose wants to expand its business in Singapore in its own name. The market research report focuses on the internal and external environment analysis for the company, the competitive strategy analysis, mode of entry analysis along with marketing mix for the company to enter the market of Singapore.

Market or business environment refers to factors and forces, which affects Waitrose’s ability for building and maintaining successful relationship with customers. There are internal and external environments of a firm. Porter’s value chain and SWOT Analyses will be used for internal environment analysis and PESTLE and Porter’s five forces model are used for external environment analysis for Waitrose for expanding its business in Singapore.

Internal environment refers to the endogenous factors of Waitrose that influence the business activities and profitability of the retailer. To expand the business in Singapore, Waitrose must analyze the internal factors, such as, resources and competitive advantage, its strengths. weaknesses, opportunities and threats to make a strategy accordingly.

Figure 1: Porter’s value chain analysis

(Source: Porter and Heppelmann 2014)

Inbound logistics

The inbound logistics operations of Waitrose are big and complex and include the supply of hundreds of product categories across 352 stores in the UK. It exploits the economies of scale to create value for the customers. It invests regularly to enhance the inbound logistics system. The payment system to the suppliers is monitored regularly so that there is no issues.

Market or Business Environment of Waitrose

Operations

The company has two types of stores, one is the normal Waitrose outlet and the other is the convenience store, named Little Waitrose. It also operates a website with online shopping option. In both type of shopping options, it provides various categories, like, groceries, entertainment, florist, gifts, pets, garden products, wine and spirits. Apart from that, Waitrose provides cookery training to the interested people, good food guide, gift cards and loyal membership.

Outbound logistics

Cost-effectiveness and flexibility of deliveries provide value for Waitrose regarding outbound logistics. It provides home delivery options for online grocery shopping and in some of the physical stores. It also adds up to the value for customers.

Sales and marketing

Waitrose recently launched its new promotional food with a focus on the good food. They have used the tagline ‘Great food is simple when you start with the best’ under the campaign ‘Beautifully Simple’. It puts emphasis on the quality of food and its simplicity. As it holds a position for supplying the best quality of food, sourced from local British farms, hence, it aims to create customer value by offering the simple but quality food and make life better.

Service

Waitrose provides highest level of customer service and support. They have easy return, refund and exchange policies for both the physical store and online purchases. They provide 24*7 customer support service regarding any query of the customers. Waitrose also offers community service through their CSR programmes.

Firm infrastructure

The infrastructure of Waitrose is of high quality and has state-of-the-art amenities and appliances. With more than 350 stores across UK, and close to 30 convenience stores, Waitrose maintains its infrastructure quite well. The warehouse has most modern facilities for storing inventories. The shelves of the stores are always well stocked. The appliances are up-to-date and monitored to keep the storage fresh.

Human resources

All the employees of Waitrose are under direct control of JLP. Waitrose employs full time and part time workers and provide industry standard wage. The employees are given training for best quality customer service, as well as enhancing product knowledge, managing supplies and inventories.

Technological development

Waitrose invests a lump sum for technological advancement and application. It has launched its mobile app to make the customer experience all the more better and convenient. The websites are continuously improved to provide seamless customer experience and highest value. The self-checkout stations are being increased and maintained on a regular basis.

Internal Environment Analysis of Waitrose

Procurement  

The company procures raw materials and other supplies from local manufactures and farmers as they promise to provide the products originated in the country. They maintain an efficient and cost effective supply chain for procuring fresh and prepared products under different categories.

 
Table 1: SWOT analysis for Waitrose

(Source: Author)

From the SWOT analysis of Waitrose, it can be said that the company has the biggest publicity factor from its entitlement of the royal warrant. It has been chosen by the royal palace to supply the groceries, wine and spirits and this acts as the biggest strength for the company for any type of business venture, locally or globally. Along with strong brand identity, highest quality of supply and other strengths it can explore the opportunities in the Singaporean market that has huge labor, huge demand for retail goods, and good economic condition of the citizens. However, being a new entrant, Waitrose faces the risk of lagging in the competition from already established supermarket.

External environment are the exogenous factors and forces that affect the businesses of Waitrose. The Singapore market is the external market and this analysis will highlight those factors in the Singaporean market that would influence the business operations of Waitrose. PESTLE analysis and Porter’s five forces analysis are described below.

PESTLE is the external market analysis tool to analyze the political, economical, social, technological, legal and environmental factors for a company. The PESTLE analysis for Waitrose is as follows.

Political

Singapore is a democratic country and it is politically stable. That has reflected in peace in the country and a better standard of living. Singapore is free from any beaurocratic corruption and hence, the country has been a choice for foreign investors. The business opportunities have improved over time. However, there are limitations on the freedom of speech for the opposition parties and there is fear of legal suits on account of defamation from a speech or comment.

Singaporean economy is a free-market or mixed market economy. It has developed very rapidly in the past few decades. It has the highest per-capita income among the ASEAN countries. Moreover, the lack of corruption in every sector has helped the economy reach heights. The business environment is competitive and the workers are educated, motivated and hardworking. Along with that, the government has invested a lump sum to diversify the economy, which led to a rapid growth in tourism, pharmaceutical and many more sectors. It also receives skilled and unskilled cheap labor from the neighboring countries. However, the country is facing issues with rising labor cost in the recent past.

Porter’s Value Chain Analysis of Waitrose

Social

The country follows traditional values in the social life. The literacy rate is high and people are hard working. The population has a mixed culture from the natives and the immigrants. They prefer service industry more than the manufacturing jobs. English is the official medium for communication, making it easier for the foreign investors, and there are few barriers for the multinational firms. However, there are some racial issues in the country.

Technological

Singapore is technologically advanced country. The fast change in the lifestyle and living standard are accredited to the technological development. Internet has reduced the time and cost of business and the Singaporean government has been investing in the technological field to provide much improved computer and internet service to the citizens. FDI has increased in the technological sector. The technologically sophisticated and capital intensive industries are supported and encouraged by the government for rapid development.

Legal

The Singaporean government facilitates the growth of e-commerce business, which is beneficial for both the domestic and international online retailers. The other acts and regulations are quite liberal for doing a good business in Singapore.

Environmental

Ministry of the Environment and Anti-Pollution Unit of the Singapore government work efficiently to reduce the environmental footprints. Companies are mandated to follow CSR policies. Shortage of water and pollution from transport are two major concerns for the country.

By analyzing these factors it can be said that Waitrose will have a positive external environment while expanding its business in Singapore. There is not much legal or economic barrier, rather a business supportive political, economical and social environment and technological advancement of the country will be helpful for Waitrose.

This analysis tool is used to measure the industry rivalry, threat of substitutes, threat of new entrants, bargaining power of the suppliers and buyers for any organization.

 
Table 2: Porter’s five forces analysis for Waitrose

(Source: Author)

From the above analysis, it can be inferred that, Waitrose will face hard competition from the existing supermarkets in Singapore. However, a section of the market is familiar with the brand Waitrose as they have been supplying products to its client Cold Storage. This buyer power will be beneficial for them during expansion. On the other hand, Waitrose must make contacts with local farms and farmers for fresh, locally grown food products and local suppliers for other goods. Since, they are a new entrant in the market; the suppliers will have a higher bargaining power. There is high threat of substitutes as other established supermarkets, operating for a long time in Singapore, such as, NTUC Fair Price shops, provide quality products at a cheaper price. Regarding the threat of new entrants, Waitrose itself will be the new entrant in the Singaporean supermarket industry and hence, they will create the threat to the other players. However, since it generally caters to the up-market consumers with higher priced quality products; any other firm can enter the market with lower price strategy.

SWOT Analysis of Waitrose

Figure 2: Porter’s generic strategy

(Source: Tanwar 2013)

With the use of Porter’s Generic Competitive Strategies, Waitrose will determine the ways of competing in the Singaporean supermarket retail industry. The relative position of Waitrose within the industry will determine its profitability and competitive advantage. Among the three different strategies for gaining competitive advantage, Waitrose will choose the cost leadership strategy. With this, it can cater to broad target market in Singapore by offering lower cost. Waitrose can capture a bigger share of the new market by being a low cost producer. With the pursuit of the economies of scale, proprietary and advanced technology, and high level of capital, Waitrose will be able to access the high quality and locally grown raw materials. Since Waitrose is the new player in the supermarket retail of Singapore, they will not gain benefit by product differentiation and focus strategies, until they establish a brand name. Thereby, cost leadership strategy will be most appropriate for Waitrose to expand business in Singapore.

Waitrose will adopt the direct investment strategy for entering into the Singapore supermarket retail. Since, the political and economical environment of Singapore is supportive for business growth, and FDI is encouraged with flexible regulations, hence, Waitrose must take those opportunities to invest directly in Singapore. The trade openness policy of the Singapore government helps the foreign investors in many ways and hence, the net inflow of FDI to Singapore is very high. In July 2017, the FDI inflow was SGD 23354.1 million (). With direct investment, Waitrose can enter the market with its established brand name and reputation, developed in the UK market. It can also take advantage of the liberal policies regarding foreign investment. It will open stores across the country and will launch a website for online retail with all the product sections they provide to the UK consumers. Waitrose already exports its home brand products to Cold Storage, which is sold from the shelves of the store. Thus, while expanding business in its own name, direct investment in the Singapore market will be the most appropriate strategy for Waitrose.

Waitrose will follow the 7P’s of marketing strategy for the Singaporean supermarket and grocery retail industry. The 7P’s of marketing mix includes product, price, place, promotion, people, process and physical evidence.

Figure 3: 7P’s of marketing

(Source: Jain 2013)

Variety of differentiated products, that includes fresh groceries, packaged and prepared foods, wine and spirits, and gifts, florists, garden, pets, entertainment products constitute the product portfolio of Waitrose in the UK. They will maintain the same structure and product categories in the Singapore market also.

External Market Analysis of Waitrose: PESTLE and Porter’s Five Forces Model

Waitrose provides general average and competitive pricing in the UK market for high quality products, while it will adopt the lower pricing strategy in the Singaporean market as it will be a new player in the industry. Higher price will not be beneficial for Waitrose while expanding in a new market.

Waitrose will launch its business with initially 5 stores across the island country and its website with online shopping opportunity. By evaluating the business scenario and profits for four quarters, it will make strategy for further expansion. Other than that, it will continue exporting its products to Cold Storage for sales.

Waitrose will publish its advertisements in newspapers, flyers, magazines, billboards and hoardings, television, radio, social media and YouTube. It will air celebrity endorsements, and provide 50% discounts on the total bill amount to the first 100 shoppers in every five outlets on the day of launch. For the first week, they will provide extra 10% off for all the shoppers. They will also give a lucky draw coupon for the customers to win good prizes.

The citizens of Singapore and the tourists are the target market for Waitrose. The company will hire local people in all its positions and will train them for best quality customer service.

Physical evidence

Waitrose will launch the loyalty membership card MyWaitrose in Singapore also, similar to the UK stores. The employees will be given uniform with the green logo of Waitrose. They will also keep stationeries with the logo.

Conclusion 

The supermarket and grocery industry of Singapore is a booming market. Supported by the trade openness and liberal policies for business by the Singapore government and a stable economy, the country offers good scopes for profitable business for the local as well as international investors. Waitrose is 6^th largest supermarket and grocery retailer in the UK. It exports its products to Cold Storage supermarket in Singapore. However, Waitrose will be expanding its business in Singapore through direct investment. It will open 5 stores and launch a website in Singapore in the original brand name. The company has high amount of capital and a biggest strength of holding the royal warrant in UK, which is beneficial for international expansion, while lag in the global competition is a weakness. It will adopt the cost leadership strategy for gaining competitive advantage, as there is high competition from the existing and popular supermarkets like NTUC Fair Price Shops. With the appropriate use of 7P’s of marketing mix, Waitrose aims to target the consumers of all income groups and the tourists to expand its business in Singapore.

References 

Jain, M.K., 2013. An analysis of marketing mix: 7Ps or more. Asian Journal of Multidisciplinary Studies, 1(4).

Lees, N.J., 2014. Delivering high quality, safe and environmentally friendly food through long term agribusiness supply partnerships: Case study of Waitrose Supermarket’s, Welsh and New Zealand seasonal agri-food supply chain.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), pp.64-88.

Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and management, 15(1), pp.11-17.

Waitrose.com, 2018. Waitrose – Online Grocery Shopping | Free Delivery | Recipes | Wine | Party Food. [online] Waitrose.com. Available at: https://www.waitrose.com/ [Accessed 16 May 2018].

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