Waitrose takes first steps abroad

Waitrose hopes to cater to high income UK ex-pats living tax free

Waitrose has said it will expand overseas for the first time with a deal to open its upmarket food stores in the United Arab Emirates (UAE).

Under a licensing arrangement with Gulf-based food group Spinneys Dubai, the firm expects to have 20 Waitrose supermarkets in the region by 2010.

The first store is expected to open next April in a suburb of Dubai populated by Europeans living abroad.

The move follows steps by Marks and Spencer, and Tesco to grow globally.

Waitrose said that following the construction of its first store, two further purpose-built branches will open in July and October 2008.

This agreement is set to accelerate export trade for Waitrose Richard Hodgson, commercial director, Waitrose.

One will be situated adjacent to the Dubai Marina, and the other at the new Burj Dubai Mall, which it said is expected to be the biggest shopping centre in the world.

Waitrose exports its own label products to more than 20 countries around the world, but the move signals the first time in the 104-year-old company's history that its store front will appear outside of Britain.

"This agreement is set to accelerate export trade for Waitrose and marks a significant milestone in our international ambitions," said Richard Hodgson, commercial director for Waitrose.

The supermarket chain's international business could be as much as 10% of overall turnover within the next 10 years, he told the Financial Times newspaper.

Eastern promise

A key part of the growth strategy of UK supermarkets has been to expand into emerging markets.

This has been to protect themselves against a downturn in UK consumer spending as higher mortgage rates and credit card charges prompt many shoppers to cut back on their spending.

By contrast, domestic spending in the fast-growing economies of Asia and the emerging markets of Eastern Europe is on the increase, helped by strong industrial output and an improving outlook for jobs and wages.

The wealth in the oil-rich tax-free Gulf states has also been drawing investors' attention to the possible retail opportunities.

"We find it difficult to imagine that UAE residents won?t take Waitrose to their hearts," said Howard Wheeldon of BGC Partners. He continued that if they do and if the UK market does falter through the year ahead then the plan to move into the UAE "will be seen as the right decision".

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