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Analysis

How John Lewis plans to bounce back

2021 will see John Lewis close eight of its 42 stores, but will an £800m investment be enough to salvage the upmarket retail chain?

In 2007, upmarket retail giant John Lewis revealed plans for an ambitious expansion scheme, which aimed to double the size of its business. At the time, the company only had 26 sites across the UK and the £700m investment was created to increase its high street presence: bringing a further 24 outlets into smaller towns and cities such as Chester and York. 

The announcement followed what had been a successful few months for the luxury department store, with the group citing a 51% increase in profits to £146m in the six months to the end of July 2007. 

Taking a turn 

However, flash forward to 2021 and the future for John Lewis and its 42 sites is very uncertain indeed. Instead of opening stores, the brand, which was founded over a century ago, has confirmed plans to permanently shutter eight of its branches – placing 1,465 jobs at risk. 

Among the closures are its Chester and York branches, which launched 13 years ago, along with six others in Ashford, Basingstoke, Tunbridge Wells, Aberdeen, Peterborough, and Sheffield. 

The news followed a less than favourable trading update published by John Lewis Partnership – the group’s parent company – this March, with the retailer showing it had swung to a pre-tax loss of £517m for the year ending in January 2021. 

Speaking earlier this month, Sharon White, chair of the company, attributed the performance to Covid-19 troubles, changes to its head office and growing demand for online shopping. White, who entered the role in 2020, said that “there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store” – adding that the past year has “been one of the most challenging in the Partnership’s history”. 

Not going down without a fight

When taking a closer look at the group’s report, it is clear that John Lewis is determined to not become another casualty on the UK high street. The Partnership has plans to inject £800m in 2021/22 to support its turnaround – approximately 40% higher than previous years. 

Unlike some of the chain’s competitors, such as Debenhams which collapsed last winter, John Lewis has a number of subsidiaries which it can tap into to help aid its struggling retail branch. Among these are grocery chain Waitrose – which saw its sales rise by 10% in the last 12 months – and a financial services arm: which offers home insurance policies.

According to Kate Hardcastle MBE, a retail analyst and business consultant, the group’s push to upgrade its financial service offering – which first launched in 1983 – could be “a pivotal turning point,” due to the continuous demand for such services. “John Lewis have undergone a number of challenges recently,” she says, “but they are not going down without a fight. They have been working hard to see how they can restructure their offering, and one way they are doing this is by looking into expanding their financial service offering. There is always a demand for financial services, so this could be a pivotal turning point.”

While it is unlikely that every UK city will house a full John Lewis department store in 2021, the group has revealed plans to bring its supermarket and retail “brands closer together”.

Currently, the Partnership is trialling the introduction of John Lewis shopping areas in Waitrose stores in Godalming, Horley, Wallingford, Lincoln and Lymington – noting that the “early signs are positive”. 

If successful, the group plans to roll out to a “significant number” of its 331 Waitrose shops – adding that part of its “revival scheme” will see all the general merchandise in Waitrose shops to be sourced from John Lewis. 

Embracing online

As part of its efforts to bounce back after a difficult period of trading, John Lewis also intends to invest heavily into its online offering. Its website, Johnlewis.com has seen traffic increase significantly, up 73%, and accounted for three-quarters of the brand’s sales in its last financial year. 

Those in the retail space will know that the pandemic has accelerated the demand for online shopping: but will a greater move to e-commerce selling be enough to salvage the brand? “As John Lewis looks to the future, a sharp focus is also needed on data-sets regarding customer footfall and feedback to enable the remaining stores to trade with relevance and profitability,” says Paul Kirkland, retail and hospitality business development director at Fujitsu. 

According to the director, a “data-driven approach leading the business”, will also provide a “strategic strategy regarding store locations; enabling branches’ pain points to be dealt with in their infancy”. He concludes: “Due to John Lewis’ exceptional customer service, it’s unlikely the name will disappear off the high-street in its entirety.  However, an evolving omnichannel and data-driven approach will certainly help revive the business in the coming year, as well as reinvestment in its store formats to freshen up its customer offer and demonstrate more relevance.”

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