Why John Lewis hasn’t lost its sparkle
John Lewis Partnership (JLP) chair, Dame Sharon White may feel the organisation’s brilliance is diminished as she elects to conclude her turbulent five-year tenure, but there’s reason to believe consumers still embrace JLP’s unique retail essence.
We’ve watched as White was dealt massive trading blows. We saw her react, introducing several policy changes as part of her transformation strategy to turn around the firm’s profitability, which had issued worrying distress signals before she stepped over the threshold.
Some of the plans tabled under White’s leadership were controversial, particularly those appearing to unravel the unique golden threads of the business. Her proposal to demutualise and pivot towards external investors, were it adopted, may have eroded a noble, beloved and admired core foundation. The current ‘in-it-together’ employee ownership structure is an enviable benefit retained by the 80,000 John Lewis and Waitrose workforce, and a strong indicator of John Lewis Partnership brand values.
I can, however, understand the temptation to explore the idea; businesses are always looking for ways to accelerate growth and opportunities to attract large cash injections – but the unintended, de-stabilising consequences could have been disaffected staff, who currently do a fabulous job of living and breathing the unique JLP essence that keeps shoppers walking through the doors.
Dame White executed broad cost containment measures such as; the closing of 16 stores, the withdrawal of the John Lewis ‘Never knowingly undersold’ price match pledge in 2022, and the review of Partner bonuses in 2020, where JLP announced zero bonus payments following catastrophic sales due to pandemic lockdowns. Seemingly, 2023 Partner bonuses are at risk, as their half-year outlook summary explains: ‘Our priorities for investment remain to modernise the business, improve customer service and do more for Partner pay, where we can. These demands are significant and take precedence over the Partnership Bonus.’ Source: John Lewis Partnership unaudited interim results.
83% of department stores closed in five years
In recent years, we’ve seen other large department stores exit our high streets, such as BHS and Debenhams. I was shocked to see House of Fraser, Reading, with just clearance stock remaining – closing after 24 years of providing opulence and glamour to Oracle Centre shoppers. An article by Mail Online, 8th October, explained that the House of Fraser brand could be at risk of disappearing entirely under the Fraser Group owners.
With the department store format widely perceived as outdated, (a staggering 83% of stores closed in the last five years; of 388 department stores closed – 237 still stand vacant, according to 2021 data compiled by CoStar Group for BBC), this could be why White decided that JLP must diversify and set plans in motion to move into financial services and building homes for rent. Again, these plans have attracted heat, and we’ll have to wait to see if the incoming chair continues to develop these new business models.
Clearly, John Lewis continues to struggle, and if it all sounds gloomy, it is. It’s tough out there.
The company announced in its September update that the modernisation plan will take longer to achieve, going from 2025/2026 to 2027/2028. For me, the takeout is – customers are willing to stick with JLP on this journey.
‘Sharon White, Chairman of the Partnership, said: “The Partnership is a unique model that has been tested and come through stronger many times in our 100-year history. While change is never easy – and there is a long road ahead – there are reasons for optimism. Performance is improving. More customers are shopping with us. Trust in the brands and support for the Partnership model remain high.”’ Source: John Lewis Partnership unaudited interim results.
John Lewis explains why store visits are up
As proof they still have consumers’ vote of confidence, John Lewis Commercial Director, Kathleen Mitchell highlights significant shifts in shopping behaviours within their annual ‘How We Shop, Live and Look 2023 report’: ‘“Evening shopping has been replaced by weekend shopping. Customers are eating, drinking, spending time in our shops and enjoying all that our stores have to offer – customer numbers are up 8% on last year as many families have discovered, it’s quite a good value day out!”’
The report reveals that visitor numbers on Saturdays have increased by 11% compared with last year. This chimes with my own belief that the nation still rates their highly knowledgeable staff, customer service and after-sales care – all the brilliantly executed basics for which they have few rivals.
With eyes on the peak sales period, the team remains positive. I am, too. After all, the John Lewis Christmas advert can’t be far away – and if anything brings glad tidings, it’s that.
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