John Lewis price promise to stay

John Lewis has vowed to increase marketing support behind its Never Knowingly Undersold price pledge this year, despite the impact it has had on profit.

John Lewis

The department store chain restated its commitment to the price matching promise after reporting a 20% fall in full year profits, down in part as a result of the increasing cost of the price matching promise.

John Lewis invested £24m more in Never Knowingly Undersold in 2011 than in the previous year, as rivals have increased discounting and promotional prices, but says it still maintained its gross margin from 2010.

Craig Inglis, John Lewis marketing director, says that the pledge to match the prices of rivals, including on discounted items, helped to increase sales in the past year. Further campaign activity is expected later this year.

Inglis adds: “We view it really positively as it shows our ability to think in the long term. We’ll continue to invest in it [Never Knowingly Undersold] no matter how much it costs and the reason is straightforward – because its rooted in the brand.

“In a tough market it’s not easy to do but it differentiates us and has helped us grow sales. It makes us unique and if we lost that, the brand would be weakened.”

John Lewis will also continue to invest in new own label brands that are exclusive to John Lewis as well as branded propositions.

Elsewhere, Rupert Thomas, marketing director at Waitrose, the grocery chain also owned by parent group John Lewis Partnership, also stood by its strategy to invest for the long-term despite a short-term impact on profit.

Profit at Waitrose fell 5.2% in 2011 but Thomas says that in the past year, Waitrose has increased shopper numbers thanks to its investment in value – through the Essential range, new products, price matching and by adding 1000 more promotions each month.

Waitrose plans that more than 40% of its products will be new or improved in the coming year and it also plans to launch an ecommerce smartphone app that lets customers do their food shopping via mobile devices. It currently only offers a content based iPhone app.

Thomas adds: “In such a tough economic climate it is important that we compete harder than ever for sales, whilst also preparing our business for future growth in a rapidly changing market. We have prioritised our short-term investments in terms of what is right for our business and for our customers in the longer-term – including becoming a truly multi-channel business and ensuring we offer our shoppers the best possible value.”

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