ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN:
Now with just three weeks left until Christmas, Waitrose is bracing itself for the spending squeeze hitting the middle classes. Research by Visa shows that consumer spending has so far fallen by just over 6% on a year ago. The Managing Director of Waitrose, Mark Price, joins me from Southport today, a very good morning to you Mr Price. Let me ask you then about trading, how do things compare with this time in 2008?

MARK PRICE:
If you go back to 2008, obviously the economy felt different. If you compare it to 2010, people will remember we had all that snow a year ago, it started to fall last week and that severely disrupted trade and then the cold weather continued and we had further heavy snow before Christmas, so I think retailers in general feel there is a real opportunity this year because of the disruption we had last year because of the snow.

DERMOT MURNAGHAN:
But nevertheless those economic storm clouds are gathering, if not gathered already, people must be cutting back particularly with supermarkets like your own?

MARK PRICE:
Well what we are finding in food retailing is that people are still spending so this year I suspect food retail will be up by about 3%. In non-food items there has definitely been a cut back with people spending less and that’s not surprising, Dermot. What we have seen is inflation go up this year, we’ve seen a squeeze on pay, we’ve seen inflationary pressures come through in commodities and of course in fuel, petrol prices and energy prices in general and so it is true to say that consumers have less disposable income this year than they had the previous year and we see that manifest itself in a number of different ways. On the one hand we see customers trading down to value lines like Essential Waitrose in our own shops but also people are trading down out of restaurants so our top tier ranges are selling extraordinarily well and people are managing their budgets. But Christmas is still a massive time for us, in the UK economy it is something like £86 billion is going to be spent in the run up to Christmas so there is still an awful lot to play for.

DERMOT MURNAGHAN:
Talking about things to play for, despite those circumstances you described, the ambition is still to grow the business, grow the company in many different areas.

MARK PRICE:
Well absolutely right. We are very confident about the Waitrose business, for the last three years we have been the fastest growing supermarket in the UK, we are investing in full line supermarkets, we are investing in convenience shops and we are investing in on-line and that’s because we know that people would like to shop at Waitrose. We are very under-represented in the UK at the moment, there are six million people we know who would love to shop with us but just don’t have easy access to a Waitrose shop so we are very committed to trying to get Waitrose products to as many people as we possibly can.

DERMOT MURNAGHAN:
Can I just ask you about that online, I mean a lot of people know about Ocado, we know the relationship you have with them, so why do you need to invest separately?

MARK PRICE:
Well we have been investing in Ocado now for more than a decade, they are a great way of getting our products to people but there are areas of the country where Ocado don’t reach and we have shops but also we think the market is big enough to satisfy both Waitrose and Ocado, it is growing so quickly and we know that over the next five to ten years, online retailing in food and elsewhere will be the fastest growing area. In fact the UK now is the third fastest growing internet and largest internet market in the world. You might be surprised to hear that 11% of retail sales, but also the market in the UK is as big as France and Germany put together, so massive growth to come online and we’re determined to be a part of that, both with Ocado and in our own right.

DERMOT MURNAGHAN:
Do you benchmark your performance against other food chains and supermarkets? It must be a source of pride to you that overtook M&S.

MARK PRICE:
Well it was but I suppose we don’t look at it that way, Dermot. We see ourselves as being a long-term business, we’re owned by all the people that work in Waitrose, we’re part of the John Lewis Partnership and for me the source of pride is that we’ve got a sustainable business in five years, in ten years, in twenty years, so yes, it was wonderful for the people in the business that two years ago we became a bigger premium food retailer than Marks and Spencer’s and that continues to grow but what both Marks and Spencer’s and Waitrose do is look to educate people about really eating great quality food and I think one of the things I found most surprising about the more difficult economic conditions is that people are viewing value in a different way. Value isn’t cheapness, it is a combination of quality and price and what we’ve seen is the top end of the market has done remarkably well in all of the food retailers and Waitrose has really benefited from that.

DERMOT MURNAGHAN:
You talked about the ownership structure and I suppose social responsibility, how much of your time do you devote to that issue, of responsible businesses doing their bit for communities?

MARK PRICE:
Well I do a lot. I am Chairman of Business in the Community, and Business in the Community is a huge charitable organisation. We have got 850 companies who are members, 65 of the FTSE 100 companies are members and these companies really take the importance of social responsibility and place it at the top of their agenda and so we get executives like Paul Dreschler, chief executive of Wates, running a programme called Business Class, where business executives go into schools and help and support schools. We have got another programme run by Steve Holliday, chief executive of the National Grid, on work inspiration, where we take children out of schools and we help put them into the workplace so that they understand the world of work. We are really concerned about young people and making sure that young people have got real opportunities in the workplace and what we all fear is a lost generation of young people who are not going to get the opportunity to work, so all the businesses in Business in the Community are really committed to trying to give those young people the best possible opportunity. We are concerned about the environment and we all want sustainable businesses and Alex Gourlay, the chief executive of Boots runs a programme which is all about making sure that businesses does all it can to be sustainable, so I think there is a real groundswell of concern from business about making sure that we play our part in helping the UK economy and making sure we do all we can through these difficult economic times to help those least advantaged.

DERMOT MURNAGHAN:
Great to hear it, Mr Price. Thank you very much indeed for your time. Mark Price there, the MD of Waitrose.