John Lewis, Waitrose: Australian Market Entry

John Lewis, Waitrose to hit Australia

By Michelle Hammond
Friday, 11 March 2011

UK department store John Lewis is planning a two-pronged entry into the Australian market by expanding its online operation, as well as potentially opening franchised stores under its supermarket brand Waitrose.


John Lewis, which is a high-end department store chain, has unveiled plans to open its general merchandise eCommerce site to Australian consumers as part of a major push into international markets.


John Lewis plans to sell products through its website to 25 countries, starting in June with European countries, and expanding to Australia, New Zealand, the United States and Singapore in August.


The retailer, which owns 32 John Lewis department stores, has no plans to open bricks-and-mortar stores in Australia.


Instead, consumers will be able to purchase online from a wide range of merchandise including clothing, footwear, home wares and cosmetics, all of which will be delivered by courier.


Meanwhile, its upmarket supermarket chain Waitrose is in discussions with potential partners about opening franchised stores in Australia.


Waitrose’s head of development Nigel Keen has said the gourmet grocer – which has 244 supermarkets in the UK – wants to open stores in Australia, Asia and South Africa under franchise agreements.


The retailer is hoping to take advantage of the strong Australian dollar to target expats who are familiar with the John Lewis and Waitrose brands.


Waitrose currently has two stores in expat hotspot Dubai in partnership with a local retailer, and opened its first franchised store in Bahrain last month.


National Retailers Association spokesman Michael Lonie says the department store’s online expansion will open up additional markets for the retailer for a relatively low cost, which means fewer consequences if the operation collapses.


“It puts pressure on our department stores, David Jones and Myer, who are clearly under pressure already,” Lonie says.


“I find the timing interesting. The Australian dollar against the UK pound has increased, so that will be a factor.”


Lonie says John Lewis is a very good operator, but isn’t certain its scope is wide enough to gain a stronghold in the Australian market.


With regard to Waitrose, Lonie says the chain is an exceptionally good brand relying on the high end market and a higher discretionary spend.


However, he says running a foreign franchise can present issues around branding and supply chains, and isn’t convinced Australia’s culture lends itself to gourmet grocers.


“Waitrose in the UK has a really good name – it’s the first place you hit. I’m not sure it will be the first place you hit in Australia,” Lonie says.


Lonie says while Waitrose may prove popular among inner-city residents, those in the suburbs are less likely to embrace the concept of shopping little and often.


“Food is just so difficult to get right. [Waitrose] is okay perhaps for dry food, but for fresh produce – no,” he says.

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