John Lewis is rightly proud of its heritage… but it’s a short step from pride to hubris

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So, it lastly got here to go. John Lewis Partnership has proven itself to be fallible.

The as soon as seemingly impregnable division retailer and Waitrose meals retailing group has produced a set of figures that may not have appeared out of kinds in the event that they’d belonged to… nicely, Home of Fraser or Debenhams. The mutually-owned excessive avenue bellwether (a title that used to belong to Marks & Spencer, however not since its long-term decline) has confirmed to be simply as weak to the tough winds blowing by means of the UK retail sector.

Blimey, if the mighty John Lewis is struggling then issues have to be actually dangerous. Out of the blue, too, its broadly admired enterprise mannequin of mutual possession doesn’t look so sensible because the agency’s workers, sorry companions, are left questioning about their annual bonuses.

John Lewis income plunge 99% and outlook is gloomy

Two components have been largely guilty, stated the chairman, Sir Charlie Mayfield, for the 99 per cent drop in interim pre-tax income to simply £1.2m: uncertainty and a weak pound brought on by Brexit; and the price of honouring its long-standing promise of “by no means knowingly undersold” in a market ever extra depending on heavy discounting.

Actually, Charlie? Are particular person shoppers actually not shopping for a steam iron or a brand new comfier couch due to the choice over Britain’s future membership of the EU?

The very fact is, that employment continues to flourish, the economic system stays robust. That will change, come Brexit, no person is aware of – however it hasn’t occurred but.

As for the weak pound, that’s solely impacting on the margins, and comes nowhere close to to accounting for a close to 100 per cent collapse in profitability. A lagging forex additionally cuts each methods. Some shops in London and different centres on the abroad vacationer itinerary are having fun with booming footfalls, exactly due to the cheaper pound. If Mayfield ever walks round London’s West Finish he could observe that the likes of Harrods, Fortnum & Mason and Selfridges are teeming, whereas the flagship John Lewis in Oxford Avenue is quiet. And he could wish to ask himself why?

The reality, I believe, is that in contrast with these shops John Lewis merely will not be thrilling. In opposition to them it appears positively dowdy and uninteresting. Their window shows and ground layouts are visually attractive. They make purchasing appear enjoyable and arresting. John Lewis, in contrast – and Home of Fraser, Debenhams and sure M&S are additionally related – make it appear as if a chore, an obligation, slightly than one thing pleasurable and uplifting.

In accordance with Mayfield, the second issue, dwelling as much as its value pledge, eliminated £40m from the income for the primary half of the yr. It’s positively the case that the historic mantra has develop into a yoke across the neck in robust instances. Beleaguered Home of Fraser and Debenhams, particularly, have each engaged in large-scale gross sales promotions, in more and more determined makes an attempt to battle off the competitors from on-line.

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John Lewis, which guarantees to match costs from “bricks and mortar” retailers however not online-only, has been obliged to observe swimsuit. Undoubtedly that has come at a price. It’s laborious to see how that ache won’t intensify as extra excessive avenue retailers slash costs to attempt to keep alive. Mayfield, nonetheless, maintains he’s not for altering the assure. “No different enterprise has a value promise as complete as ours – nobody else has something fairly prefer it. In instances like this, the integrity of that promise is examined, however we will’t be by no means knowingly undersold within the good instances, we’ve to have the ability to provide it within the robust instances.”

He’s mistaken. Worse, Mayfield is enjoying a harmful sport. If he’s not cautious, John Lewis will develop into like the remainder, chasing the bottom frequent denominator of value. Not solely is it a hideously expensive ploy however ultimately, it received’t work – simply have a look at Home of Fraser and Debenhams, nonetheless unable, in spite of everything their particular bargains and reductions to compete with the likes of Amazon. That isn’t a route down which John Lewis ought to journey.

In fact, John Lewis is pleased with its heritage. Nevertheless it’s a brief step from pleasure to hubris. What John Lewis administration must be asking is what number of of their customers genuinely go to John Lewis as a result of it’s low cost? Do they go for John Lewis due to that value pledge?

If I’m typical I’ve chosen to make use of John Lewis as a result of I do know it’s going to present a better degree of service, deep data of what it’s they’re promoting, a willingness to make sure I get the suitable merchandise, even when which means not promoting me one in any respect – not as a result of I’m enticed by value.

John Lewis ought to construct on its strengths, not get down with the remainder. And people qualities are having 83,000 companions who’ve a deep dedication to the enterprise as a result of they’re its homeowners, who exit of their approach to serve, and to please. Mayfield and co are worrying about matching others for value – when the fact is these rivals can’t themselves match John Lewis for service.

The group is on a slippery slope. Pursuing worth will result in reducing corners, to shedding employees, decreasing inventory, scaling again on product ranges, lengthening supply instances. It might already be doing so. For some time now, my spouse, who’s a canny choose of these items, has been complaining “John Lewis will not be what it was” and “the service will not be the identical”.

Having had a comparatively simple journey in recent times, John Lewis finds itself at a crossroads. However selecting the course simply marked “value” will not be the best way forward.

Chris Blackhurst is a former editor of The Impartial, and director of CTF Companions, the campaigns and strategic communications advisory agency



Supply hyperlink – http://www.unbiased.co.uk/information/enterprise/remark/john-lewis-waitrose-price-match-customer-service-risk-a8537621.html

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