Let’s applaud John Lewis: Putting People over Profit
Let’s put this simply.
Retail in the UK is undergoing destructive changes never seen before. There are less consumers with disposable income than previously. These customers prefer to buy online from Amazon and spend whatever else they can on experiences rather than possessions.
Department stores are more at risk than most because their traditional model is focused on selling brands, most of which you can now buy cheaper elsewhere. Operationally they are also expensive to run, particularly against the back-drop of hikes in business rates and an apathetic government.
Add into the equation a weak pound making buying costs comparably higher, and a world glut of product from over-production and seasons of falling sales. Higher costs and a frenzy of sales promotions reducing realised margins.
I dare say most retailers would rather be in some other place now. John Lewis is no exception.
However, reducing costs, number of stores and substantive proportions of the workforce in an ever-vain attempt to eke out profits whilst entering a deepening spiral of failure, is, in contrast to other less enlightened businesses, not on the John Lewis agenda.
It is investing.
It has a bold and imaginative plan to turn around its fortunes. This involves creating stores full of experiences and exclusive product. It is investing as never before in its fashion collections to develop new brands and assortments. It is investing in ranges which will be over 60{9a7291a7292e83c5148384adada0c82317c2655f4bcb859b5345564a4c272287} unique to John Lewis. It is becoming own-brand focused to deflect the margin sacrifice from its “Never Knowingly Undersold” price promise. It is investing in staff training to deliver the best customer service. It is investing in its partners and in its customers. It is investing in people.
No one will regret more than this business the job losses that the market demands. No business will regret more than this the lack of profit share for its workforce. No business will try more to restore the fortunes of its partners and its customers.
Because of investment, it will make no profit this season.
John Lewis is run by shrewd and clever retailers. Its workforce at every level is an industry standard and a credit to the retail profession. However probably its largest asset is one that it doesn’t have – external shareholders and investors in search of quick but unsustainable profit.
So, let’s applaud John Lewis for its bold strategy.
As customers we have a choice of spending our money wherever we wish in an over-supplied market. We can put our money in the pockets of remote and anonymous investors, individual entrepreneurs and business men, or in the pockets of people who make John Lewis one of the best customer experiences around.
As always, the choice of who survives in the UK retail landscape will be in our hands.
Are you missing the opportunities to develop unique ranges?
Are you stimulating and engaging your workforce?
Are you putting people first?
We can help?
Sleep on it and give us a call in the morning…
tim.radley@vm-unleashed.com
0044 79676 609849