John Lewis Partnership has seemingly hit its stride in its turnaround as it revealed today it was on track to deliver “significantly higher” profits this year.
The retail giant, which also owns Waitrose, reported it had narrowed its pre-tax losses from £59m to £30m as sales rose 2% to £5.9bn.
As Shore Capital analyst Clive Black says: “It is pleasing to see this British retail institution out of the surgical ward and almost exiting the medical one too.”
With John Lewis chief executive Nish Kankiwala confident the partnership will deliver “significantly higher” profit this year, Retail Gazette takes a look at why the retail giant is feeling so positive as it prepares to enter its busiest period of the year.
Positive reception to Never Knowingly Undersold
This time around the department store is using AI to help it match its prices to those at 25 retailers, including M&S, Next, Boots and AO.com.
“We expected it to be positive. I can genuinely say it’s been exceptional,” says executive director Peter Ruis, adding the retailer has enjoyed “some incredible sales and some incredible traffic across both big channels”.
He notes the John Lewis website is enjoying 55,000 more organic visits every single day since its relaunch.
Ruis shares Never Knowingly Undersold’s return is “affecting all our assortments” including in “areas that you wouldn’t say are naturally part of this conversation, like own-brand bedding or nursery”.
John Lewis is looking to maintain its momentum around Never Knowingly Undersold throughout the golden period as it staggers the release of a three-part ad campaign, which concludes with its much-loved Christmas ad.
Winning shoppers at Waitrose
Waitrose is entering the golden quarter on a high thanks to a 5% boost in sales for the first half. According to Kantar, the upmarket grocer gained market share for the first time in over two years in July, as it nudged up 0.1 percentage point to 4.5%.
The retailer said it posted ten consective quarter of customer growth, which executive director James Bailey says has come from “lots of different places in the market”, such as its competitors and a boost in lunchtime trade following the launch of its meal deal.
“Our lunchtime trade is up quite strongly, our dinner for tonight trade and things like that. So it won’t always just be from competitors. It might just be about growing spend from our existing customers,” he explains.
These are early signs that the retailer’s investments over the past six months are bearing fruit. It spent £39m on price cuts in the half to bolster its value offer and win back the customers it lost as shoppers sought cheaper groceries elsewhere amid the cost-of-living crisis.
The lower prices were also joined by an enhanced product range, such as new partnerships with Ottolenghi and food health company Zoe.
Waitrose’s investment into relaunching its No1 range should also pay off in the coming months as customers look to treat themselves more in the wake of easing inflation.
“Waitrose has had a really strong first half. We’re going to take a lot of that momentum and confidence into the second half, and looking ahead, we have a really strong pipeline of exciting plans, which I think will delight our customers and accelerate that growth,” says Bailey.
Historically, Waitrose has upped its market share over the golden quarter by a couple of percentage points – so the stage is set for the grocer to have a merry Christmas.
A new improved John Lewis shop floor
Ruis has certainly been busy in his first eight months back at John Lewis as it seeks to make it a more desirable place to shop in time for its busiest season.
“We made a deliberate choice to invest for the second half, which really is the John Lewis half, to drive growth productivity and enhance customer experience,” he says.
The retailer has been expanding its ranges across all categories and welcoming new brands into the fold such as Loewe, Trinny London, and Stanley Tucci’s Greenpan range.
Ruis says John Lewis is making “significant improvements to our physical estate”, referencing the three new beauty halls opening next month at its Oxford Street, Cheadle in Stockport and High Wycombe in Buckinghamshire stores.
“We have an innovative in-store computing format and exciting new concepts in large electrical and jewellery, with further brand updates across all our stores.”
John Lewis Oxford Street will also welcome a Waterstones bookshop at the start of October, allowing shoppers to browse and purchase from nearly 20,000 books.
The physical store changes are also being met with more partners on the shop floor after the business restructured its store staffing last month.
“This is all underpinned by a continued focus on customer service, with more partners in customer-facing roles, supported by additional service training, improved use of technology such as headsets, and coming soon, the ability to take payment on mobile partner devices,” Ruis adds.
Waitrose store openings and revamps
The next six months will see Waitrose’s store investment programme come to fruition with the roll out of its new shop format and the first tranche of new openings.
“We haven’t actually opened a new shop in over six years now, although we’re changing that in a couple of months,” says Bailey.
After announcing plans to open 100 new little Waitrose stores last month, the retailer will soon open its first at Hampton Hill in South West London.
The new stores will be joined by the roll out of its new updated store format in eight of its larger stores in the next six months as part of a wider plan to improve 150 existing sites.
Waitrose teased the new concept at its John Barnes stores on Finchley Road, which reopened at the end of August that Bailey notes is performing “well ahead of expectations”.
The store features an expanded fresh produce department that places extra emphasis on its organic fruit and vegetable ranges, a fully updated refrigeration system, the first fully chilled beer, wine and spirits department, and a new look and feel bakery among many others.
Despite the supermarket admitting last month it has yet to nail down the new blueprint for its revamped stores, the changes will be a marked improvement to its current offer.
Improved availability
Online and in-store availability has been a sore spot for the partnership’s two brands in recent years causing customers to head elsewhere for their shopping.
It seems the tide is changing with Waitrose reporting “record” availability levels in the past six months at 96.5%, up from 96.1% the year before.
John Lewis is also reaping the benefits of increased product availability, and the launch of its new ship-from-store technology will mean that “everything in our 36 stores will become available for our customers online,” Ruis said last week.
“It’ll be completely friction free – you won’t know that that your T-shirt has arrived from our Cardiff store or has arrived from our DC in Milton Keynes. It’ll just be virtual and will make online service really good.”
After a tough three years where it has racked up some eye-watering losses, it seems like the business has finally nailed its customer proposition and delivered on the three things it has long prided itself on: product, quality and service.
Click here to sign up to Retail Gazette‘s free daily email newsletter
