Waitrose Returns to Growth Under New Leadership as Battle With Marks and Spencer Intensifies

The John Lewis Partnership’s supermarket chain Waitrose has demonstrated renewed commercial vigour following a challenging period marked by pandemic disruption and intense competitive pressure. The retailer’s sales grew 5.5 per cent during the four weeks ending December 27, according to market research firm NielsenIQ, representing a substantial improvement on the prior year’s 2.7 per cent Christmas performance.

This resurgence coincides with a leadership transition. Tom Denyard, formerly an executive at Tesco where he led the online division, assumed the role of managing director last week. He replaces James Bailey, who departed in August after a five-year tenure. The appointment signals a strategic shift as Waitrose seeks to consolidate its market position against formidable competition from Marks and Spencer’s expanding food operation.

The performance improvement reflects broader operational changes implemented under Jason Tarry, who joined as chairman of the John Lewis Partnership following three decades at Tesco. Tarry, who played a central role in Tesco’s recovery from its 2014 accounting scandal, has brought renewed focus to fundamental retail execution. His tenure has emphasised shop floor operations, product availability, and customer service enhancement.

Waitrose has committed £1 billion to store investment, with 23 locations undergoing comprehensive transformations during 2025. These renovations include upgraded facilities, expanded ranges, and improved presentation. The retailer has also directed resources towards staff training programmes designed to elevate the in-store customer experience. Product availability has reached 97 per cent, earning the company its first Grocer Gold award for this metric.

The operational improvements have translated into financial results. First-half sales for 2025 exceeded £4 billion for the first time, growing 6 per cent year-on-year, while operating profit reached £110 million. These figures represent a marked departure from the difficult period under former chairman Dame Sharon White, whose leadership from 2020 onwards saw job reductions, store closures, and significant losses. IT system failures in 2023 caused widespread stock shortages, compounding customer dissatisfaction.

Controversy emerged in 2023 when reports indicated that White and senior management were considering selling an equity stake worth up to £2 billion, potentially ending more than 70 years of employee ownership. The proposal generated substantial internal opposition and raised questions about strategic direction. Tarry’s arrival has brought operational stability, though profitability challenges persist elsewhere in the partnership, with John Lewis department stores recording pre-tax losses of £88 million in the first half due to restructuring costs and increased employer national insurance contributions.

Consumer behaviour patterns have shifted in Waitrose’s favour. Retail analysts observe that customers increasingly substitute restaurant dining and takeaway meals with premium home cooking, benefiting upmarket grocers. This trend contributed to strong Christmas performance across the sector’s premium segment, with Sainsbury’s achieving 5.7 per cent growth to claim the top position among full-line supermarkets.

However, market share data presents a more complex picture. Waitrose maintains a 4.2 per cent share according to NielsenIQ, unchanged from 2019 Christmas levels. Alternative data from Kantar suggests a decline from approximately 5 per cent in 2020 to 4.7 per cent currently. Industry observers note that growth rates merely match overall market expansion rather than representing genuine share gains. A major food supplier expressed cautious optimism, acknowledging operational improvements whilst noting that Waitrose traditionally performs well during the Christmas period.

The competitive dynamics with Marks and Spencer represent the most significant strategic challenge. M&S surpassed Waitrose in market share during 2024, reaching 4.9 per cent in the December period. Under chief executive Stuart Machin and food managing director Alex Freudmann, M&S has executed a transformation from a convenience-focused basket shopper destination into a full weekly shop destination. The company has identified 500 potential locations for new food stores as it pursues an ambition to double its food business.

This expansion poses structural difficulties for Waitrose. Whilst M&S benefits from focused investment in its food division, Waitrose operates within the broader John Lewis Partnership structure, where capital allocation must balance competing demands. The partnership’s financial position limits Waitrose’s capacity to match M&S’s expansion pace, despite the supermarket division’s profitability providing crucial support to the wider organisation.

The loss of the Ocado delivery partnership to M&S has particular strategic significance. For many consumers, online grocery shopping through Ocado had become synonymous with Waitrose. The partnership switch has enabled M&S to extend its reach into premium home delivery, previously a Waitrose stronghold. This development has accelerated M&S’s transformation from a supplementary shopping destination into a primary grocer for affluent households.

Waitrose has responded with targeted initiatives. A new format store opened in Newbury, Berkshire during November, featuring an expanded cheese section, customised meal preparation services, and an enhanced café offer. The company describes this as a “Home of Food Lovers” concept that may be replicated if successful. Technology investment totalling £50 million is funding electronic shelf labels, automated gap detection systems, and other digital tools designed to improve operational efficiency.

The retailer has also refreshed its premium Waitrose No.1 range, seeking to reinforce quality differentiation. Store refurbishment programmes include improved merchandising at high-visibility locations such as gondola ends, reflecting a more commercial approach to space utilisation. Supply chain improvements have addressed the stock availability issues that damaged customer confidence during 2023.

Market conditions present both opportunities and constraints. Whilst inflation has moderated from peak levels, many consumers continue experiencing pressure on discretionary spending. Restaurant and takeaway prices have increased substantially since the pandemic, encouraging more frequent home preparation of premium meals. This benefits quality-focused retailers, though sustained benefit depends on maintaining value perception relative to alternatives.

M&S faces its own challenges despite strong food performance. A cyberattack last year forced suspension of online orders for an extended period, impacting customer relationships. Fashion sales remain weak, with Christmas trading below expectations in this division. These difficulties may moderate expansion pace, though the core food business demonstrates continued momentum.

Shore Capital analyst Clive Black suggests Waitrose has been systematically under-resourced relative to competitors, contributing to margin deterioration. The requirement to subsidise John Lewis losses has limited investment capacity, though the supermarket division remained profitable throughout recent difficulties. Black notes that even with improved leadership and clearer strategic focus, catching M&S will require sustained execution over multiple years.

Industry executives emphasise the need for consistent delivery beyond seasonal peaks. Quarterly performance will determine whether recent gains represent sustainable recovery or temporary improvement. The St Albans store renovation exemplifies both progress and challenges. Customers report generally positive experiences, though some question specific additions such as the sushi counter, whilst others criticise increased self-checkout deployment reducing personal service.

Denyard inherits a business showing clear improvement from recent lows, operating in favourable market conditions, but facing a revitalised competitor with substantial expansion resources. His background managing Tesco’s digital operations may prove valuable as online grocery shopping continues growing. However, the fundamental challenge remains unchanged. Waitrose must deliver consistent operational excellence whilst navigating capital constraints, all whilst M&S aggressively expands its physical presence and builds the full-range credentials that previously distinguished Waitrose.

The competitive dynamic between these two upmarket grocers will shape the premium supermarket segment for years ahead. Waitrose has arrested its decline and stabilised performance. Converting stabilisation into sustained growth against a determined and well-resourced competitor represents the test facing Denyard and the management team. The Christmas performance provides encouraging evidence of progress, though as one supplier noted, demonstrating consistency beyond traditionally strong seasonal periods will prove decisive.