Exclusive to John Lewis: “40% of our profits will come from the non-commercial sector by 2030”
High Street giant John Lewis looks back on a difficult year. In March, the 157-year-old partnership announced it would not reopen eight stores after the lockdown restrictions were eased, putting nearly 1,500 jobs at risk.
The value of John Lewis stores has fallen to almost half of what it was before write-downs this year and last year, due to the shift to online shopping during the pandemic.
Profit before special items was £ 131million in March, but the department store chain would have recorded a loss without government support linked to the Covid crisis.
Time for City AM to catch up with the company’s longest-serving senior executive, Andrew Murphy, who is executive director of operations for the John Lewis Partnership.
Reporting directly to President Sharon White, the former head of Ofcom, Murphy joined John Lewis over 28 years ago in Aberdeen, rose through the ranks of the partnership and joined the management team in January 2018.
Retail has had an absolute nightmare year, with three tough lockdowns. JL has decided to close a series of branches. How can John Lewis and the others bounce back?
While the pandemic has clearly been a nightmare for society and on a human level, as a business we have been through it in a much better shape than we could have feared. However, retail was a struggling industry before March 2020 and the events of the past year have accentuated this and accelerated some key trends – like going online – so we need to continue to adapt and evolve. very quickly and with confidence.
Can you give us an example?
Yes, of course, we’ve done a lot of work on the trends in the way customers across the country buy. So, for example, while we will have fewer full-line department stores, we will invest a lot more in existing stores so that they are really worth visiting and visiting regularly for inspiration and for experiences that you just can’t get it online. We will also feature smaller local stores. These will be supported by the 900+ locations that already exist to Click & Collect our products and we will be offering more John Lewis products in our Waitrose stores. Service remains our strength and we will continue to invest in service and service at home, nursery and fashion, both in stores and online. Our products also aim to inspire and broaden our appeal, as highlighted by the recent launch of our own brand “ANYDAY”.
You are the longest-serving member of the Partnership’s executive committee. Apart from the impact of the pandemic, what is the main change that you have witnessed in the past six years?
Six years ago we ran John Lewis and Waitrose as two very separate companies. The management team at the time functioned much like a supervisory board with two boards of directors managing business operations. Since the start of 2020 the management team has taken more direct control of the management of the business and there are multiple aspects of our two brands that we manage as a single consolidated business – e.g. technology, delivery of change, ownership and the supply chain – the areas I take care of – and finance, strategy and our people work too. This combines to make us a faster and ultimately more productive business.
One of the things you are responsible for at John Lewis is technology. How important is technology to JL’s offering and what technology trends are you watching closely?
Technology is now what real estate was to retailers throughout the 20th century. You simply cannot run or grow a business on any scale without it. Additionally, retailers – by definition – must reflect the society and the customers they serve. So technology is key to JL and Waitrose offerings now and even more so in the future – with around 60% of John Lewis’ sales made online now and with Waitrose able to process up to 240,000 Waitrose.com orders each week. – more than four times the amount at the beginning of 2020.
Customers want more flexibility and choice in how and when to buy, and technology is an integral part of this offering.
But what’s really important is that we use it in a way that maintains the level of service and trust that our relationship with our customers is built on. This year, for example, we will invest £ 50million in johnlewis.com, improving shopping tools like search and sorting, making the shopping journey easier, creating more virtual services and events. , we’ve hosted 11,000 virtual events over the past year and enhancing both the digital and in-store experience through our app. We’re also working on live chat and bringing richer content into customer journeys based on customer feedback and ideas. In terms of trends, we are developing our capabilities in AI and machine learning, especially with regard to automated data analysis, decision making and process automation; two aspects of technology that will have transformed the workplace and businesses by the end of the decade.
Let’s look to the future, life after confinement, the post-Covid market. What do you think of the recovery process?
The nature of the partnership model allows us to invest in a longer term perspective than a conventional business, even in difficult times and in a very uncertain economic environment. Back in the teeth of the financial crisis in 2007/8 we made some bold decisions and investments moving our entire product assortment online, it has a similar feel to it.
The ambition of the John Lewis Partnership is that 40% of profits will come from new, therefore non-commercial, business lines by 2030.
For this to be true, we must continue to evolve, be bold and explore new ways of delivering customers. Our clients want John Lewis and Waitrose to play a bigger role in their lives; especially in areas where trust really matters and where existing suppliers do not live up to our customers’ expectations. We are therefore going to broaden the scope of our financial services, we have already relaunched our home insurance offer and rolled out interest-free credit on all our channels, and we have set aside significant funds for innovation and partnerships. We truly believe that there is a sweet spot here for a brand with the loyalty and customer trust that we generate and as a business that is not solely driven by profit.
And that includes moving to a home?
Yes, we are laying the groundwork, literally and figuratively, to move into private rental housing, another market in which we attract a huge number of clients. Meanwhile, there are many opportunities that we are looking for closer to our retail core – especially in rental, resale and recycling – we hope to be a significant player in the circular economy.