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Upmarket supermarket retailer Waitrose announced recently that it has acquired 19 stores from Morrisons, including 18 that were previously owned by Safeway, and one which formerly traded under the Morrisons fascia. Waitrose has picked up the stores as part of the forced disposal of 52 outlets imposed on Morrisons by the Office of Fair Trading in the wake of the Safeway acquisition. This is the largest single acquisition undertaken to date by the company and will add a total of 50,000 square metres to the existing Waitrose estate, representing a 12% increase in sales area, and bringing its store numbers to 164 outlets. The new stores are located across the country and will take the John Lewis-owned retailer into new markets in the North of England and reinforce its position in the South East. Subject to clearance by the OFT, the stores are due to be rebranded under the Waitrose fascia by the end of the year. The outlets are typical supermarkets, although one store could be converted to its new Food & Home superstore format.

Waitrose is rightly in a buoyant mood. This acquisition comes on the back of a strong results statement in which the company announced that over the past 12 months, "Waitrose had a spectacular year". Overall, sales grew by 12% to USD4.9 billion with same-store sales up 5%. Further, its new Food & Home branches at Canary Wharf and Cheltenham produced "outstanding sales performances" in their first full trading year. During the year four new supermarkets opened and a store was relocated in Romsey.

Waitrose partly attributes the success to its focus on high quality foods, which has not been diluted by diversification into non-foods. Nevertheless, it has recently announced that following successful trials of John Lewis schoolwear in its stores last year, it is to move ahead with an increase in space devoted to non-food lines. It plans to devote 5% of space in its biggest shops to John Lewis own label products, such as textiles, toiletries and hosiery.

Looking ahead it plans to open four new branches this year (in addition to the Morrisons' acquisitions) and to start construction on a new Food & Home store in Maidstone. In addition it is continuing with its store refurbishment programme which involves an increase in floorspace devoted to chilled food and vegetables, new checkout systems (including self-scanning), a new corporate identity and an expansion of its WaitroseDeliver home shopping service. Although very much a niche player, with just 2.3% of the food market, its success shows that there remains a viable gap for retailers targeting quality, rather than price-focused, customers and that growth opportunities do exist beyond the mass market.
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