John Lewis relies too heavily on its heritage – here’s what it could do instead

In a tough financial local weather, the British division retailer John Lewis has managed to ship some excellent news. The retail partnership – owned by its 80,000 staff – posted pre-tax earnings of £56 million after a £234 million loss the yr earlier than.

The constructive announcement was considerably tarnished by the truth that these staff (often called companions) wouldn’t obtain a bonus for the second yr in a row. There have been additionally hints of job cuts.

However what extra may this large of UK retail, which additionally owns Waitrose supermarkets, do to endure its survival? Does its rising reliance on grocery gross sales imply its personal model has change into much less helpful?

For over 160 years on the excessive road, John Lewis has labored laborious on that model.
Its slogan (scrapped in 2022) about being “by no means knowingly undersold” was well-known, it stays a trusted provider of an in depth vary of family hoods, charges extremely for customer support, and runs Christmas TV adverts which have grew to become a media occasion in themselves.

In doing all of these issues, John Lewis gave the impression to be in a significantly better place than its rivals. BHS (based in 1928) and Debenhams (1778) have disappeared from the excessive road. Home of Fraser (1849) was taken over and has a much-reduced bodily presence.

John Lewis’s nearest rival, Marks & Spencer (1884), is now doing effectively, however solely after it underwent a reasonably brutal restructuring which concerned slicing 1000’s of jobs in the course of the pandemic, closing 67 shops, and slashing its operations in France.

So John Lewis’s “model heritage” – its historical past, custom and pedigree – has labored fairly effectively for a fairly very long time. However its latest return to revenue was the mixed effort of reinvesting and streamlining, in response to some studies.

Also referred to as “trimming the fats” within the enterprise world, the retailer’s streamlining endeavours consisted of slicing greater than 1,500 jobs, and shutting underperforming shops, such because the department in Sheffield, which had served residents for almost 80 years and was a lot mourned, together with by my very own mother-in-law.

It has additionally been reported that extra job cuts are imminent, with as much as 11,000 jobs to go within the subsequent 5 years.

And maybe these measures spotlight among the harsh realities of working a division retailer within the always-open and easy world of on-line procuring. Perhaps staff (even these thought of companions, as below John Lewis’s employee-ownership mannequin) have change into expendable.

Perhaps bodily shops, the place shoppers go to discover and search recommendation, have change into expendable. Perhaps all traditions are expendable when they don’t seem to be commercially viable.

Folks first

But the world of retail is stuffed with examples of heritage manufacturers reinventing themselves to remain related, buoyant and aggressive.

John Lewis might want to do the identical if it needs to retain its legacy on the British excessive road. And it may do worse than taking a leaf out of Waitrose’s playbook.

For the corporate’s return to revenue was largely because of the buoyant gross sales generated by Waitrose supermarkets, which elevated by 4%. The division retailer enterprise in the meantime, suffered a 2% fall.

A part of Waitrose’s success comes from offering a way of indulgence and pleasure – together with wholesome meals – by means of fastidiously curated and sometimes domestically sourced merchandise. It really works carefully with native farmers, helps regional suppliers (an method that has additionally contributed to M&S’s success), and reinvests in shops and product provides.

Basically, as a part of UK’s grocery sector, Waitrose prolonged its partnership ethos to incorporate folks and teams past the store partitions – to construct a “native retail ecosystem” that promotes and leverages a group spirit round their shops.

John Lewis department shops may attempt to do one thing comparable. They might focus extra on merchandise that assist prospects dwell more healthy and extra lively lives, and that are related to their pursuits. They might promote merchandise created by native small companies, and make a decided method to be a supportive presence within the areas they serve.

Analysis means that heritage manufacturers profit from having an ethical standing – after they present they care in regards to the folks they become profitable from, the native communities they function in, and the folks they make use of.

So maybe John Lewis ought to make ethical values part of its evolving heritage. It wants to point out it cares not only for the individuals who work for the corporate straight, but in addition the folks on whom it depends for fulfillment – the shoppers – and folks it might probably construct new relationships with. All of them may show essential to its future success.