John Lewis ‘must axe stores to survive’

THE John Lewis Partnership’s next chair, Sharon White, must trigger a fundamental review of the ‘Never Knowingly Undersold’ slogan and consider closing some stores, a retail veteran has said.

The company made a loss in the first half and is merging the management teams of John Lewis department store and grocery chain Waitrose to save £100 million costs. But analyst Richard Hyman warned conditions are set to worsen.

‘The retail industry is suffering from chronic oversupply,’ he said. ‘In the next five years there is going to be an enormous shake-out and some big retailers aren’t going to be around any more. The trick for the others is to batten down the hatches and get through this period.’ He said the John Lewis chain, which last week demanded 20 per cent rent cuts from landlords, is ‘much too big’, as more and more purchases are being made online. ‘John Lewis and Waitrose are fantastic businesses with many strengths. But more needs to change and the new structure is going to need quite a bit of fine tuning,’ he added.

Hyman said White, who arrives next year, may consider watering down the price guarantee – which exposes it to rabid discounting from struggling chains such as Debenhams – rather than ditching it altogether.

‘I’m cautiously optimistic for John Lewis – emphasising the caution because it’s all about execution. But I think “Never Knowingly Undersold” will be high on the list of things she needs to look at.’