John Lewis boss begins revamp to save retailer
Dame Sharon’s shake-up includes garden centres, online expansion, rentals and affordable housing
THE new boss of John Lewis has launched a revolutionary plan to save the retailer in which it could open garden centres, junk a long-standing price promise and turn department stores into affordable housing.
Chairman Dame Sharon White unveiled the most radical proposals in the chain’s 156-year history in a letter to staff, as it battles for stability in the wake of lockdown.
She expects the department store to be a mostly online retailer in the future with 60pc of goods sold over the internet, up from 40pc before Covid struck. Its network of more than 40 stores is to be relegated to a supporting role. The firm’s Never Knowingly Undersold promise to match the lowest price offered by rivals – introduced in 1925 – is under review and could be dropped.
In her letter to staff, Dame Sharon said: “We have a real opportunity to update our purpose so that it resonates with today’s customers and partners.”
Dame Sharon is also launching a push into services, with plans to let customers rent products instead of buying them, and a major expansion of the company’s finance arm, which offers credit cards. It could also buy up or open garden centres and create a marketplace for second-hand goods.
Arguably the most radical proposals are plans to turn empty sites into affordable housing, with the mutual potentially becoming a landlord. The chain is now in talks with potential partners about this scheme.
John Lewis is shutting eight of its 50 department stores to save costs, including a sprawling 250,000 sq ft site in the centre of Birmingham.
Dame Sharon said: “As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use.”
The update follows months of deliberation about how to return the lossmaking department store chain to its former glory, and help sister business Waitrose capitalise on the boom in home deliveries since lockdown. Former top civil servant Dame Sharon launched the review in March alongside a new team of executives, shortly after she took charge of the business.
The chairman has given herself and the 80,000 staff a year to start seeing progress in trading, but warned that it could take up to five years for profits to recover. The business has £2.4bn of debt and its structure makes it impossible to raise cash by selling new shares.
Like almost every other player on the high street, John Lewis is battling a crisis that has turbocharged shoppers’ stampede to buy over the internet. Part of Dame Sharon White’s response is straight out of the industry playbook. More shops could close, she said, selling online is crucial and the grand old department chain will aim to do more of it. No surprises there.
But that is where normality ends. Dame Sharon is clearly willing to try a raft of unconventional ideas in her battle to reinvigorate the chain – from becoming a residential landlord to stocking second-hand items.
There is even a plan to double-down on gardening in the chairman’s manifesto – the most popular idea with John Lewis employees.
And mixed in with the bold new strategy is talk of promoting equality and sustainable living – noble aims that industry observers stressed will only be achievable if it is matched by a focus on maximising income.
“Horticulture, where did that come from? Haven’t they got enough problems? It is a bit bonkers,” said Richard Hyman, an independent retail analyst. “In order to have the permission to have a green, sustainable agenda, in line with the traditional John Lewis values, you have to be able to drive revenues.
“That gives you the permission to develop those values. If your business faces an existential threat you need some commercial solutions first and foremost.”
The plan is in stark contrast with the company’s decision to sell 1,200 acres of land as part of its Leckford Estate in Hampshire to a private buyer earlier this year, just before Dame Sharon took over.
The deal was part of an £18m transaction, according to Companies House accounts documents for one of its subsidiaries, which also included a previous property sale.
While the mutual has had some support from external advisers, most of the proposals were a crosspollination of initiatives put forward by suppliers, its staff and customers. Hyman thinks an unusual plan to turn stores into affordable housing is welcome, given that John Lewis was already planning to shutter shops before coronavirus. Like many of its peers, the mutual has already admitted to having too much space.
It is also planning to beef up its credit arm to ease the pressure on its own finances. John Lewis had already been quietly ramping up marketing of loans, foreign currency and pet and wedding insurance in its department stores and supermarkets, as well as online, last year. Its online ambitions to turn both John Lewis and Waitrose into a “digital first” business will renew speculation that the top brass might have to consider a takeover or merger to guarantee success. Dame Sharon has ruled this out in the past. She expects the supermarket chain to go from 5pc to 20pc of sales online.
“That’s a hell of a jump – are they going to go to bed with someone else?” a grocery source said. “That implies a lot of further [store] closures.”
Dame Sharon unveiled her plans only internally, leaving speculation to run rampant in the gossipy retail industry. An insider said these plans are just the first step in a bid to resurrect the business, and she will put forward a more comprehensive strategy in the autumn.
This gives enough breathing space to a string of new executives – including James Bailey at Waitrose and Pippa Wicks at John Lewis – to potentially come up with their own radical ideas or reject existing ones.
Either way, it will not be the traditional department store as we know it.
Sharon White, the John Lewis chairman, expects the department store to become an online retailer with shops in a supporting role
Dame Sharon White has a radical plan