K-9 Mail will use APOP for authentication if you select “Encrypted password” for authentication and the server doesn’t support CRAM_MD5. However, mail.waitrose.com doesn’t seem to support APOP, either.
Select “Normal password” under “Authentication”.
Side note: The server doesn’t seem to support transport encryption at all. So the password and all mail contents will be transferred in plain text (without encryption) over the internet when you download messages. I recommend switching to a different email provider.