John Lewis Partnership, the company behind John Lewis and Waitrose, says it will invest more behind the brands as it looks to strengthen its performance in retail while expanding into new areas such as horticulture, private rental housing and financial services.
A review into the business conducted by new chairman Sharon White found that while John Lewis and Waitrose are “two of the best loved and trusted brands in the UK”, it needs to ensure they are relevant to younger people. That means the company will “double down” on making shopping easier and more convenient by investing in availability, personalisation, better rewards for the most loyal customers, convenience and introducing John Lewis into Waitrose.
White describes John Lewis as the “go to brand for life’s big moments” such as weddings, first homes and first children, hence why customers have “such a strong emotional connection to the brand”. However, the group believes it needs a more compelling offer for younger shoppers that includes more affordable pricing, stronger curation and more local assortments.
White also sees shops as “crucial but in support of online”. That means John Lewis will “rebalance” its shop estate and make its home range available in Waitrose. Shops will be more focused on showcase products and offering experiences.
We are a business that is all about purpose. We have a real opportunity to update our purpose so that it resonates with today’s customers and Partners.
Sharon White, John Lewis Partnership
It has already said it will renew its ‘Never Knowingly Undersold’ price promise.
At Waitrose, the hope is to take the brand beyond traditional retail, with the company “exploring” opportunities in food delivery and the convenience market. Its food products will become available in more John Lewis shops, while it will increase its focus on sustainability and high standards of animal welfare to ensure its own-brand food “stands out further from the market”.
JLP also sees an opportunity to “update” its purpose to ensure it is “modern, relevant and inspiring” while staying true to core principles of equality, wellbeing and sustainable living. That could lead, for example, to the company taking “firmer action” on fair pay, working conditions, diversity and inclusion. The new purpose is expected to be finalised in the autumn.
White says: “We are a business that is all about purpose. We have a real opportunity to update our purpose so that it resonates with today’s customers and Partners. Customers and Partners have told us that our purpose should be modern, relevant and inspiring – while staying true to our core principles. The themes of tackling inequality, of wellbeing, and sustainable living will be at its core. These have never felt so relevant, with the economic uncertainty and social inequality coming out of the pandemic.”
Expanding beyond retail
JLP also sees an opportunity to expand the Waitrose and John Lewis brands beyond retail, with four areas of particular interest. It wants to grow its financial services business; is exploring a new horticultural business built out of Waitrose Garden and Waitrose Farm, as well as John Lewis Outdoor Living; is considering repurposing its redundant shop estate into affordable housing; and investigating the creation of a channel for renting products or selling ‘used’ ones.
It is looking for businesses to partner with or acquire on some of these initiatives, which White says gives “new meaning” to its ‘& Partners’ branding.
White explains: “Retail profit margins are under pressure. For the Partnership to be sustainable over the long-term, we need to expand beyond retail. More than that – we have the opportunity to offer our customers new services where trust and a strong sense of purpose are important.
“The Partnership has a strong track record of innovation and enterprise. We are at our best when we are at our boldest. Partners have put forward many exciting ideas and we have selected four for further development.”
The move comes as JLP faces unprecedented pressure on its sales amid the coronavirus pandemic and a shift to online shopping. It has already warned that sales could decline by 35% at John Lewis and 5% at Waitrose this year if its worst case scenario is realised.
However, early signs are that the high street has not taken as much of a hit as previously feared and is recovering faster than expected. Next posted its half-year results yesterday (29 July) and found that sales during the pandemic were “much better than we expected” and that it now expects to be profitable this year even if there is a second wave of the virus.
The retailer’s total sales fell by 28% year on year in the second quarter, much better even than the best case scenario it modelled in April, at the height of the pandemic in the UK. Next now expects profits to be in the region of £195m, although a second lockdown could cause this to fall to just £15m. While this is well down on the £600m in profits it posted last year, it is a vast improvement on previous projections it could lose up to £150m.
“The Company is in a much better position than we anticipated three months ago: consumer demand has held up better than expected and our online warehouses have achieved much higher capacities than we thought possible,” says Next.
“[However], the duration of social distancing rules, post-lockdown consumer behaviour, earnings, unemployment and, most importantly, whether there will be a second-wave lockdown, all remain unknowable.”