Waitrose is going ahead with its expansion plans despite the economic downturn, which has hit its market share hard.

Waitrose posted a three per cent fall in first-half underlying operating profit and has been losing market share for months to cheaper rivals such as Asda and Morrisons.

However, its customers’ “insatiable” desire for deals and low prices is driving them on and retaining their custom.

Waitrose chairman Mark Price said: "We've invested half a percentage point of gross margin in pricing this year. We will invest more. I think that by the end of the year it will be tens and tens of millions (of pounds).

"I suspect that we will have invested more as a proportion of our total sales than any other retailer in price this year," he said.

Waitrose claims it is not losing any customers, merely seeing an increase in shoppers trading down to cheaper versions of their usual products.

Price said Waitrose was benefiting from shoppers trading down from restaurant meals, with sales of its "As Good As Eating Out" range up about a third this year.

According to Price, this was outweighed by customers trading down to cheaper goods, adding that demand for the chain's £10 meal deal was double what it had expected.

Waitrose bought leases on four London stores from Woolworths in June and invested £30 million in lower prices and promotions in the six months to July 26, 2008.

It is due to open its first convenience store in Nottingham in two weeks, and will open a second in Bristol in January as part of a trial that, if successful, will lead to a broader roll out in 2010, said Price.

A trial of mid-sized Market Town shops would also be extended in 2009.

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