John Lewis staff vote has not cleared storm clouds

An expression of no confidence in last year’s performance is a serious dent in the leadership of chairman Dame Sharon White

Gatherings of the John Lewis governing council tend not to be dramatic affairs. But perhaps the writing was on the wall when Dame Sharon White, the mutual’s chairman, kicked off the latest biannual affair with the sort of pseudo-motivational quote you might see on the wall of someone’s kitchen: “Life isn’t about waiting for the storm to pass, it’s about learning how to dance in the rain.”

Dame Sharon said she had interpreted the words from the poet Vivien Greene, wife of Graham, to mean that “it’s not the tough moments themselves, it’s how you respond to those tough moments that really counts”. There are worse things than sounding a little trite in front of a large audience. However, when tens of thousands of partners have been forced to forgo their annual bonus for only the second time in half a century, it was also perhaps a little tone deaf.

Somewhat aptly, her comments turned out to be the prelude for a rare rebellion against a John Lewis boss by the company’s 58-person staff council. A vote of no confidence in last year’s performance is a serious dent to her leadership, and while staff backed her to remain in charge, there’s no escaping that it is an embarrassing blow.

It was already becoming difficult for John Lewis to hide from the remorseless logic of its finances, which show Dame Sharon has failed to halt the decline of the retailer despite four years of toil. Now this challenge to her leadership risks throwing everything up in the air.

Discontent has been building since March, when the partnership unveiled a shrinking cash pile and a £234m annual loss across its John Lewis department stores and Waitrose supermarkets.

The news that partners would be going without an annual bonus for the second time in three years added to a growing sense of disquiet among the rank and file, but the bombshell that Dame Sharon was considering selling a stake to outside investors has prompted disbelief bordering on outright panic in some circles.

Unhappy employees took to internal chat boards, and retail figures joined the chorus of disapproval. High street guru Mary Portas was apparently so perturbed that she felt compelled to pen a personal letter to Dame Sharon urging caution. “You’re fighting to save part of our collective cultural identity,” the so-called Queen of Shops declared.

Andy Street, managing director of the retailer from 2007 to 2016, described the idea of outside ownership as a “tragedy” – although in the interests of balance, one might say the same about Street’s decision to boost John Lewis’s high street presence at precisely the time that internet shopping was taking off. John Lewis is still living with the legacy of that particular brainwave.

There has been a lot of talk about reinvention under Dame Sharon, but this has so far amounted to very little in terms of concrete results, and perhaps that’s the real problem.

For all the outrage and disbelief at the prospect of diluting the staff ownership model by bringing in a third party, would it really make that much of a difference either way?

Assuming the field of potential investors is restricted to pension funds, John Lewis would still exist, and its partners would remain in control – so in the grand scheme of things, it probably wouldn’t matter hugely.

The bigger question is whether the funds raised would change its fortunes, but again the answer is probably not dramatically. Dame Sharon reportedly believes that the sale of a 25pc stake could fetch between £1bn and £2bn, but that’s not a game-changing sum even for an organisation renowned for being conservatively run.

There’s £350m of debt that needs repaying in the next 18 months, plus a restructuring programme that requires funding and is expected to result in some serious one-off costs as hundreds more jobs are axed in the seemingly never-ending pursuit of savings. Rivals also point to the need to plough large sums into creaking computer systems, particularly at Waitrose.

Meanwhile, moves into rental property and financial services are planned, and other new ventures are being looked at, all of which will require significant investment.

It is all very well intentioned, and Dame Sharon deserves credit for thinking outside the box, but staff may be wondering if many of the ideas are simply wrong.

As Portas put it, senior management at John Lewis seem to think that the struggle “is purely financial”. Yet perhaps there’s more to be gained from trying to recapture some of the magic that once made both its department stores and its supermarkets a special place to shop.

Portas talks about “what makes up the soul of your brand” – the intangibles – but it may be as basic as improving stores and revitalising what was once considered to be the gold standard of customer service. These were the characteristics that were a big defining difference for John Lewis.

The Waitrose shop estate looks particularly tired in the face of a resurgent Marks & Spencer, but the revival of its arch-rival is at least an encouraging reminder that comebacks of old-fashioned high street names can happen if management correctly diagnoses the problem.

Like M&S, John Lewis needs to rediscover the ingredients that go into creating a shopping experience that will appeal to the middle classes again.

So Dame Sharon lives to fight another day – but the question now is whether she’s been given a genuine reprieve or merely a stay of execution.

‘Staff may be wondering if many of the ideas are simply wrong’