Middle-class favourite Waitrose risks irrelevance

With average food costs up by more than 16pc, significant price discrepancies between outlets become impossible to ignore

In the ongoing battle for supremacy of the supermarket aisles, there are really only two winners. Every quarter, for what seems like an eternity now, Aldi and Lidl snatch market share, while the rest of the pack either treads water or slides backwards seemingly unable to stem the tide.

Unsurprisingly, an era of runaway inflation has heralded a new golden age for a pair whose slice of the market has more than trebled in 15 years as customers turn to budget options in their droves. Over Christmas, the German discounters were again the fastest-growing supermarkets, leaving them with a combined 16.3pc of the UK’S grocery market, behind only Tesco with 27.5pc.

Aldi boss Giles Hurley said the chain had posted its best ever December, just months after knocking Morrisons off fourth spot. Can anything, or indeed anyone, halt the march of the no-frills kings?

Yet for every victor there must be a loser, and increasingly it looks as though Waitrose could end up being the major casualty of the latest skirmish as the cost of living crisis makes it an unaffordable choice even among a growing number of its previously loyal middle-class customers.

Not for nothing has it long been nicknamed Britain’s poshest supermarket, but data from consumer champion Which? show that Waitrose was by far the most expensive supermarket last year, with a basket of groceries costing £31 more than Aldi.

That’s a huge gulf, and while customers may be willing to pay over the odds during more prosperous times, by the same token it is hard to imagine anyone but the most wealthy paying such a big premium when families haven’t been this stretched for decades.

With so much attention dedicated to spiralling energy bills, other aspects of the cost of living crunch have not attracted such big headlines, such as the fact that Britain is in the grip of a food crisis.

Indeed, while the worst of the energy spike looks to have largely passed as wholesale gas prices tumble back to the levels they were at before Russia’s invasion of Ukraine, grocery prices remain at, or very close to, record levels depending on the figures used. While headline inflation has risen to 11.1pc – a figure not seen since the 1980s – the average cost of food has rocketed by more than 16pc.

In this scenario, big price discrepancies between outlets, often for virtually the same products, become impossible to ignore. This is particularly the case for staples, but also for branded goods, and Waitrose comes out worst on both counts in the latest research.

While a basket of 48 everyday items was £83 at Aldi compared with £113 at Waitrose, Which? also compared a larger trolley of nearly 150 branded goods including Andrex toilet paper and PG Tips tea. Here, the gap was even bigger between the cheapest and the most expensive.

With Aldi and Lidl excluded from the study because the discounters stock fewer labels, Asda came out the cheapest at £356. The same trolley of items came to £407 at Waitrose.

Rather than getting dragged into the price wars (a “race to the bottom” as one executive calls it), Waitrose has largely stuck to its “quality” mantra, insisting that it still offers value for money when other factors such as its commitment to animal welfare standards and fair prices for farmers are taken into account.

Yet, the idea that customers, even those with more disposable income, can afford to keep prioritising ethics over savings in the current economic climate seems like wishful thinking. The supermarket’s middle-england heartlands will be among the hardest squeezed this year from spiralling mortgage costs and the Chancellor’s flurry of stealth tax rises.

Shoppers of all stripes are turning to cheaper own-brand goods, with white label products accounting for more than half of all grocery spending last year. Better-off customers are no longer embarrassed to shop at Aldi and Lidl.

Waitrose hasn’t stuck to its guns entirely. The launch of a cut-price “Essentials” line of products was aimed at preventing customers from jumping ship but it has struggled at times to be taken seriously by shoppers.

In 2018, the chain was widely mocked on social media for publishing a list of “store cupboard essentials for students” that included harissa and Bouillon powder, with one user pointing out that the items would cost a total of £13 yet you still wouldn’t have anything to eat.

Still, it was nothing compared to the backlash that has greeted plans to scale back the perks that come with the Waitrose loyalty card and helped to differentiate it from lesser competitors. A decision to axe free coffees for members that had customers choking on their lattes from “grassfed” cows has been reversed – but there is no sign of the free newspaper policy being brought back.

There is a sense, too, that the gold standard once set by its higher-end ranges is under threat from a resurgent Marks & Spencer. While Waitrose suffered a sharp 5pc fall in turnover in the first half of 2022, its closest rival posted a 6pc jump in food sales.

M&S has also announced plans to open

100 standalone food stores on the back of the recent rebound, at the same time as quitting scores of larger town centre locations – a “Snickers before knickers” operation, as one consultant reportedly called it.

Assailed from every angle, Waitrose has a fight on its hands to remain relevant.

‘Can anything, or indeed anyone, halt the march of the no-frills kings?’