Lunch with the FT: Mark Price

By Elizabeth Rigby

I hear the managing director of Waitrose before I see him. “Mark Price, table for two. I’m late,” he tells the maître d’ of Wild Honey, his voice carrying down the room. Seconds later, his well-fed, smiling face pops up from behind a brown suede booth. “I’m late, I’m late, for a very important date!” he sing-songs, proffering a bag full of Waitrose goodies – caramel shortbread and white chocolate and vanilla truffles – and a kiss on the cheek.
Price squeezes into the cushioned booth opposite me, pushing out the table as he eases himself in, spotty blue and pink tie draped over his tummy, blue eyes wide open in anticipation of the lunch to come. Before we have exchanged pleasantries, Will Smith, the co-owner of this Mayfair restaurant, is at our table and offers us a complimentary glass of champagne from Anthony Demetre, the Michelin-starred head chef. “Oh that’s wonderful, oh definitely,” enthuses Price.
I assume he gets such special treatment because he comes here all the time, but it turns out that the chef’s relationship is with Waitrose’s executive chef Neil Newby, who signed up Demetre to help create posh ready meals for the supermarket chain. “Anthony is brilliant,” says Price “He did coq au vin, beef bourguignon, the lamb as well.”
As former marketing chief of Waitrose, Price, 49, never misses a chance to plug the business he was appointed to run just over three years ago. His original suggestion was to have lunch in a Waitrose café but, knowing that he is an unrepentant foodie, I insist we eat out. So he picks Wild Honey because he has never eaten here before and wants to try it.
For all Price’s love of food – in 2008 he famously dubbed himself “the Chubby Grocer” and began a blog detailing his attempts to lose weight – there is nothing flabby about Waitrose’s performance since he took over. In the past year, the upmarket chain has confirmed its position as the British middle classes’ new grocer of choice, overtaking Marks and Spencer, historically the holder of this unofficial title, in sales while managing to make an operating margin more akin to Tesco’s.
It’s some transformation. At the onset of the recession, as the British public rushed to the cheap German supermarkets Lidl and Aldi, Waitrose’s growth was non-existent. But over the past 18 months they have had a change of heart. As Waitrose opened new stores and launched a cheaper “Essentials” line, sales rocketed. It galloped past M&S in the summer of 2009 and ended the year as Britain’s fastest-growing supermarket chain. Even Sir Stuart Rose, chairman of M&S, was forced to doff his cap to Price after his rival trounced him over Christmas. “We were bested by Waitrose,” he said. “They have been well ahead over the past year.” In Britain, where the question of where people shop is often key to how they see themselves, it’s an interesting shift in the retail landscape.
Waitrose began life in 1904 as a small grocery shop on Acton Hill in west London until it was sold to the John Lewis Partnership – unique among British retailers in that it is owned by its employees rather than a small bunch of shareholders – just before the second world war. It is now a chain of 229 stores but Price – the son of a grocer, born into a nation of shopkeepers – is restless. If he has his way Waitrose will double in size over the coming decade, selling the nation £10bn worth of grub. He is so busy juggling all these balls that it was almost impossible to find a slot in his diary for lunch. Our date is squeezed between breakfast with Rose and the Waitrose summer party at the Royal Institute of British Architects in the evening.
Lunch, however, is not something to rush and, as the champagne arrives, Price settles down to the serious business of studying the menu. As his eyes flutter through the mouthwatering list of starters and mains, I mention I am on a diet of sorts in an effort to get rid of the last vestiges of baby weight. “You are not serious, you are not serious, you are not serious,” he says, throwing me a look of disbelief.
“Life isn’t about weight,” he admonishes. “You are a long time dead. This planet has been around for 4.5bn years. We are like a nanosecond in the history of time and you can’t worry about those things. Having a child is a wonderful thing, you can see the joy.” Throughout the meal Price often talks about his own children, Holly and Lily, and his wife Judith, whom he met 19 years ago while working at Waitrose’s Southampton store. Though he frankly admits that “when I retire the thing I will regret is that I have seen so little of my daughters. But I think in business it is all-embracing,” he adds. “The job is a way of life.”
Smith comes back to take our order. “We have got to have asparagus to start,” declares Price. “We have got to have asparagus in season. The great thing is there are no calories in asparagus.” Apparently the pool of soft poached egg vinaigrette doesn’t count. For the main course he mulls the slow-cooked shoulder of Welsh lamb before opting for roasted halibut with shrimps, lemon, parsley and Swiss chard while I choose the bouillabaisse. Wine is a given, although Price declines to select a bottle from the wine list and instead asks for a carafe of Smith’s choice.
The food ordered, I ask him if, amid all the serious work, he allowed himself a moment of giddiness when he overtook M&S last year. British grocers, from Terry Leahy of Tesco to Justin King of J Sainsbury, are ferociously competitive and delight in games of one-upmanship. “A lot has been made of it but I genuinely don’t see M&S as the competitor,” says Price, acting like the elder statesman. “It isn’t about taking £100m more than M&S it is about getting to an 8-10 per cent market share and for Waitrose to have the position of being the premium food retailer in the UK.”
What does he think is behind the brand’s popularity? Just like the John Lewis chain of department stores, middle England can’t seem to get enough of Waitrose. Wherever a new store opens, the shoppers come. It is a case of supply nowhere near meeting demand (Waitrose’s footprint in the UK is a flea on an elephant’s back when compared with its bigger rivals) but it also reflects, thinks Price, the shift towards a more ethical kind of consumption.
Waitrose has made a big thing about paying fair prices to farmers – recent figures from industry bible The Grocer show that it pays farmers more for milk than its rivals do – while the Waitrose Foundation, founded in South Africa in 2005, ensures that a cut of profits made on foods such as mangoes and avocados is paid directly to farm workers to spend on anything from HIV projects to football coaching. The foundation is now being rolled out in Ghana and Kenya.
“The politicisation of food is one of the major issues going forward,” Price says, finishing off his asparagus spears and taking a sip of perfectly chilled Albariño. “Waitrose has been historically well-positioned to reassure customers that these things are really important to us – we own a farm and the foundation in Africa – and we are not doing it for short-term benefits but because it is the right thing to do. I think our customers are aware ... that Waitrose cares for those things.”
The mains arrive and Price tucks into his halibut while looking appreciatively at the five dishes placed in front of me that hold my fiddly bouillabaisse. “That is major assemblage,” he says, grinning.
So are his ambitions for Waitrose, I offer, putting my dish together as Price slowly chews his halibut, its creamy white flesh strewn with shrimps and flecks of parsley. While M&S has been conquered – for now, at least – he is still dissatisfied. He has launched a convenience chain, signed a licensing deal with Duchy Originals, the royal label founded by Prince Charles, and is rumoured to be considering whether or not to buy Eat, the sandwich chain, in an effort to gain a foothold in the £18bn hot food-to-go market – his next big idea.
He also stresses that “we need to be more ubiquitous in terms of location, and we need to be more accessible. I want to see us in 700 Boots, I want to see us get into 250 Shells, I want to see us in all the Welcome Break [roadside service stations], I’d like to see us have a really big e-commerce business [Waitrose has its own online shop aside from its deal to sell goods through Ocado], I’d like to see us maximise our potential in terms of launching a big, fast-moving consumer goods brand.” Phew, I think, as he finally breaks off for a mouthful of food.
He is adamant that he is not biting off too much and it is true that Waitrose could comfortably double its market share almost under the radar of much bigger rivals (Tesco’s share of grocery shopping in the UK is 30-plus per cent against Waitrose’s 4 per cent). In fact, if it were up to him, he’d probably go faster still. “You have to go at a pace and a rate than allows you to achieve the engagement with your people. If we were going to buy a chain of say 300 shops, so we had 230 Waitrose and 300 other shops, culturally that would be almost impossible to achieve so we wouldn’t do it. The challenge is growing in a way that doesn’t erode your values.
“Restlessness I do really well,” he admits. “I am restlessly ambitious for the business.” Are you a megalomaniac, I ask? At this he guffaws and then bursts out laughing. “No, no, I don’t think I am a megalomaniac.” He laughs more. Are you a deal junkie at the very least, I press? This he doesn’t dismiss out of hand. “I wouldn’t say I am a deal junkie. I would say my board and I are pretty entrepreneurial and we can see the opportunities to grow and we understand the market really well.”
Price believes he was destined to work in the food business. His father owned a small corner shop in the centre of Crewe, Cheshire, before going on to set up his own wholesale business serving schools and pubs and smaller shops in the area. Price, the eldest of three children, would help him to unload trucks and do the customer rounds. When he graduated from Lancaster University with a 2:1 degree in archaeology in 1982, he had the choice of going to work as a graduate trainee at Marks and Spencer, then Britain’s pre-eminent retailer, but he chose the John Lewis partnership instead. “It was a pretty natural thing for me to do. I liked the culture and my father used to preach – he was an evangelical preacher – and we went to church three times a week and so values of the partnership seemed to resonate with the values I was brought up with as a kid about being straightforward and honest and looking for the good in people,” he explains.
Price gradually worked his way up through the John Lewis department store circuit before landing the marketing job at Waitrose in 1998. He agrees that it can be seen as unfashionable to work in one place all your life but, in spite of speculation to the contrary, insists he has never thought of leaving, even though he could earn far more than the half a million or so he picks up in salary and bonus. “I have never felt the need to leave. I feel a personal commitment to my team. If you are committed to something and you tell people you are going to do it, you should do it. For me, wandering off is not appropriate.”
As our plates are cleared away, the waitress recommends the wild strawberries, which have just arrived from Malaga, with milk ice-cream. Price says he doesn’t normally have dessert, but decides today that we must and orders two plates of the berries. As we wait, I wonder why Price so often plays the joker when he is clearly very driven and serious in his work. Why, for example, did he turn himself into a bit of a caricature when he started the blog charting his quest to lose 10cm from his waistline. Does he regret this? “I think it is wholly appropriate for people to be self-deprecating about themselves and their achievements, so no,” he insists. “[The Chubby Grocer] was a witty line at the time and I am still chubby and it was funny.”
The tiny red strawberries arrive. “Very good actually,” he says, as he polishes off the plate. Sipping his black Americano as we wind up, Price tells me that being “royally quizzed” is an unusual experience for someone used to asking the questions. “This is very different for me, thinking about what motivates you and what makes you tick. I don’t often bare my soul,” he muses, looking ever so slightly uncomfortable about it all. He reverts to more comfortable ground, talking more about his plans before announcing that he must take his leave. “You’d like to know [where I am going] but I can’t tell you, it’s a secret,” he says wryly, as he heads for the door and his next deal.
Elizabeth Rigby is the FT’s consumer industries editor
...................................
Wild Honey, 12 St George Street, London W1
Virgin Mary £5.25
Carafe Albariño £12.50
Asparagus x2 £19.90
Halibut £19.50
Bouillabaisse £19.95
Strawberries x2 £23.90
Fresh mint tea £3.25
Americano coffee £3.25
Total (including service) £120.94
...................................
Is Ocado the future of online grocery-shopping?
Thanks to its partnership with Ocado, the online grocer, Waitrose is at the vanguard of what could be the future of retailing. The grocery arm of the John Lewis Partnership has a supply agreement with Ocado whereby the online retailer sells food sourced from Waitrose and its supply chain, plus products supplied by big consumer goods companies, writes Andrea Felsted.
Ocado was founded a decade ago by three former Goldman Sachs bankers – Tim Steiner, Jason Gissing and Jonathan Faiman. John Lewis has since invested about £65m in Ocado, in which it holds a 26.5 per cent stake. Some 18 months ago, this was transferred to the John Lewis pension fund.
John Lewis, which bought Waitrose’s single store in west London in 1937, is about to be rewarded for its faith in Ocado. The online grocer is aiming to float on the stock exchange in a £1bn initial public offering this summer. As the largest shareholder in Ocado, the John Lewis pension fund will be the biggest beneficiary, standing to make about £270m.
One person involved in the initial negotiations says John Lewis’s investment “wasn’t put in with the prospect of it being a private equity deal, but will turn out to be one of the most successful private equity deals of the last decade.”
Ocado operates from a highly automated, 23-acre distribution centre north of London in Hatfield, Hertfordshire. On a peak day it makes more than 18,000 deliveries to its 1.6m registered customers.
Ocado also has access to what is expected to be an expanding market. OC&C, the strategy consultants, predict that by 2025 some 40 per cent of grocery-shopping will be done online.
Last year, Ocado increased its sales by a quarter to £427m. It has also been making a profit before interest, tax, depreciation and amortisation since November 2007. But it has not all been plain sailing. Ocado has yet to make a profit at the crucial pre-tax level. Waitrose has also set up its own online business, Waitrose Deliver.
Some in the industry have long predicted that the partnership between Ocado and Waitrose will one day descend from a marriage made in heaven to a messy divorce. Indeed Ocado is eyeing a tie-up with a retailer outside the UK. France’s Carrefour is mooted as a possible partner.
Last month, however, the prophets of doom were confounded when Waitrose and Ocado signed an exclusive 10-year supply deal.
Mark Price, managing director of Waitrose, praised their “great relationship”, while Andrew Bracey, finance director of Ocado, likened the presence of both online businesses to “going fishing, but with three nets rather than two”.
Andrea Felsted is the FT’s retail correspondent