As crisis on the UK High Street intensifies, department store chain John Lewis battles for reinvention under the guidance of Dame Sharon White
John Lewis will today announce a radical shake-up of the way that it deals with suppliers as the company seeks to secure its future.
The new boss Dame Sharon White, formerly a high-flying civil servant, is trying to revive the partnership’s fortunes against the backdrop of the pandemic.
Profits at the employee-owned partnership, which also owns Waitrose, fell from £452m three years ago to £146m last year including a loss for the department stores.
Driving force: Dame Sharon White is looking for wholesale change at John Lewis
Staff were also stung as their prized bonus was cut to its lowest level since 1953.
Now the coronavirus outbreak has exacerbated the gloom, leading to eight of its 51 stores to close and pushing John Lewis’s senior team to make bold changes.
In its latest step, bosses today announced the ‘Better Jobs’ initiative aims to create more ‘rewarding and enriching jobs’ at 120 companies it buys its products from.
The department store will work with firms to improve their staff’s experience at work – including career progression, job security, and wellbeing – and offer direct help from experts at John Lewis.
It comes days after Dame Sharon, who took over in February, revealed the first steps to re-invent the department store model. She said the retail-only model has become increasingly unprofitable due to rising rents and rates, and consumers moving to shopping online.
The partnership will trial a series of services it hopes will give a better return. She shocked retail experts by announcing John Lewis is in talks to turn its empty stores into private homes which it will put to ‘good social use’ by renting out at affordable rates.
Shoppers may also in future be able to rent John Lewis products, rather than buy them, as well as use their website to sell secondhand items to other customers.
It fits with Dame Sharon’s sustainability drive, which is a ‘growing priority for our customers’, but could hit full-price sales. The company will also grow its banking and financial services business and expand into horticulture and garden products.
Bosses said they would take inspiration from its Leckford Estate in Hampshire, once owned by founder John Spedal Lewis, which has a nursery shop and offers gardening services locally. The company said it is in a ‘number of commercial discussions’ and is ‘looking at acquisitions’. The department store and supermarket businesses are being merged.
The at-times messy restructuring led to the departure of Waitrose boss Rob Collins and John Lewis boss Paula Nickolds.
They left Dame Sharon, who is also axing 75 out of 225 senior head office staff in a £100m cost-cutting drive, scrabbling to fill a threadbare board.
She hired Pippa Wicks, the number two at Coop, to run the department stores, and James Bailey, ex-grocery buying director for Sainsbury’s, at Waitrose.
In the blueprint announced last week, more John Lewis stores will give a floor over to Waitrose, after successful trials. This set-up is also already in place in John Lewis on Oxford Street, London, where there is a food hall on the ground floor, and a department store upstairs.
John Lewis items will also be stocked in supermarkets, to support the click and collect service.
The concept mirrors the ‘wheel and spoke’ model used by Argos and Sainsbury’s, which allows customers to order online and pick up items in their supermarket. In John Lewis’s case, this could reduce the need for expensive stores.
John Lewis now expects 60 per cent of department store sales to go online, and up to a fifth of Waitrose orders. The supermarket is aiming to deliver 250,000 food deliveries each week as it prepares to cut ties from online grocer Ocado next month.
But profits this year and next are ‘likely to be challenged’ and not recover for three to five years.
The staff bonus is likely to be zero in the year to January and more stores will close.
Another landmark decision remains in the tray – bosses will soon decide whether to keep the ‘Never Knowingly Undersold’ price pledge. After the shuttering of the Birmingham Bullring store, there appear no sacred cows under Dame Sharon’s leadership.