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If you don鈥檛 live near a Waitrose, chances are it won鈥檛 be long before you do. Hitherto a far from ubiquitous player in the supermarket scene, Waitrose has its sights set on unprecedented expansion. Every year for the next three at least it will be spending 拢200m and building 10 supermarkets, as well as, for the first time, convenience stores. Ten years from now, it plans to have twice the number of UK shops, including 300 of the mini stores.

There is a huge group of potential customers we are not reaching because there isn鈥檛 a store near them. People should be able to enjoy good food wherever they come from

Nigel Keen, the group鈥檚 property services and property and development director, is the man responsible for overseeing this plan. And he has the experience.

鈥淚 started off at Tesco in the eighties,鈥� says the 48 year old, sitting in his office in central London. 鈥淎t the time they had a huge desire to be the number one retailer in the UK. I was fortunate to be pushed around from property acquisition to property management and planning to investment appraisal.鈥�

So, he has the skills, but the real test of the expansion will be whether the group achieves its overall goal: to increase its 4% market share 鈥渟ignificantly鈥� over the next five years. 鈥淚t鈥檚 no insignificant task,鈥� he admits. 鈥淏ut I am confident we can do it. The next 10 years is going to be great fun for us.鈥�

The roll-out of the convenience stores builds on steady growth of the group鈥檚 property portfolio over the last six years, which has involved opening an average of 20 supermarkets a year. This has resulted in a year-on-year growth rate of 12.5% - nearly four times the market average.

Waitrose bosses hope these figures suggest there is demand out there for more stores. Research by the John Lewis Partnership - Waitrose鈥檚 parent company - appears to back this up, showing that there are 6 million people that would shop at Waitrose but don鈥檛 have convenient access to a store. This is hardly surprising considering there are only 228 UK shops - compared with 2,482 Tescos, 872 Sainsbury鈥檚 and 400 Asdas.

鈥淭here is a huge group of potential customers we are not reaching because there isn鈥檛 a store near them,鈥� Keen says. 鈥淧eople should be able to enjoy good food wherever they come from.鈥�

Adjusting for austerity

鈥淭here is no doubt that two years ago consumer confidence was at an all-time low and Waitrose suffered a downturn in trade,鈥� Keen admits.

With people trying to save money in tough times, Waitrose was never likely to be the first place they were going to turn to. Last year it was reported that Waitrose鈥檚 managing director had asked more than 1,000 of its suppliers to reduce their prices by 2% due to trading conditions. This followed John Lewis Partnership reporting a 26% fall in pre-tax profit to 拢269m for the year ending January 2009.

But the introduction of the Waitrose Essentials range - specifically designed for shoppers on a budget - has pulled the store鈥檚 financials back up. Over 1,400 new 鈥渆veryday鈥� products were launched in 2009 creating more than 拢500m of sales in its first year. The range is on course to hit 拢750m in its second year. Partially on the back of this, Waitrose reported in results for the year ending January 2010 that it is getting 400,000 more customers each week. The store鈥檚 gross sales had risen 9%, reaching 拢4.5bn, and operating profit had increased by 拢56.7m to 拢268.2m.

But why enter the convenience store market, until now dominated by Tesco Metro and Sainsbury鈥檚 Local? The firm鈥檚 main aim is to increase its geographical spread - and smaller stores are easier to tailor to different sized sites: 鈥淭his allows us to have formats from 2,000ft2 to 50,000ft2 which gives us the flexibility to suit different store sizes and formats to different locations,鈥� says Keen.

He adds that customer feedback in the four test stores has been good. Located in Bristol, Nottingham, Crouch End in north London and Oxted, Surrey, the stores were designed to test performance in central London, the suburbs, provincial towns and university towns. 鈥淭he customer feedback and financial data has been excellent,鈥� says Keen. 鈥淪ales figures so far are up 10% on what we were expecting.鈥�

Work up for grabs

The opportunities for the construction industry are potentially massive. Since 2007, over 拢200m a year has been spent on developing Waitrose鈥檚 property portfolio and Keen says this rate will remain steady over the next three to four years at least, to deliver projects worth between 拢1.5m and 拢20m. Most of this work is still up for grabs.

To build 300 new convenience stores, 30 next year, is a mighty project for little old Waitrose to pull off

But there鈥檚 a catch. Although there are plenty of contracts to be won, Keen admits he has been consistently impressed by his current list of contractors: Bowmer & Kirkland, RG Carter, RG Group and Wates. But, he stresses, he is also open to new firms with fresh ideas and - as the convenience market is so new to Waitrose - now is a better time than ever to approach the retailer: 鈥淭o build 300 new convenience stores, 30 next year, is a mighty project for little old Waitrose to pull off. That鈥檚 a change to our formula and we are always looking for new ways of creating value.

鈥淢y advice to people on the outside? Don鈥檛 just send me a piece of marketing material through the post or in an email. There are plenty of other ways to get in front of my team. Think about industry events and networking opportunities where people can talk face to face.

鈥淔irms need to demonstrate what they can do differently from our incumbent suppliers. I want to hear about innovative approaches to projects, engineering solutions, new ways to tackle environmental and sustainability issues.鈥�

He may be tough when it comes to getting the right people, but Keen wants to be seen as a good client: 鈥淭he cycle we鈥檙e in at the moment means it鈥檚 dead easy to get good value for money and to get the best people working on your projects. The real test will come in the upturn. Being a good client means keeping your supply chain loyal when times are good.

鈥淥ur strategy is to make sure the supply chain recognises the value we bring during a downturn to ensure we are still seen as an important client when things improve. Also, pitching the right work at the right level is vital. Just because large contractors will take smaller jobs now, it doesn鈥檛 mean they鈥檒l be keen to do them in the future.鈥�

And does he think his existing supply chain will stay loyal? A long pause: 鈥淚 think they will. I hope they will. But no doubt someone will disappoint me.鈥�

Perhaps the next 10 years won鈥檛 be all fun after all.

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