John Lewis and Waitrose are trialling combining their loyalty schemes as they look to better link the two brands following their rebrands last week.
Speaking to Marketing Week on a press call this morning (13 September), John Lewis Partnership (JLP) chairman Sir Charlie Mayfield said it will be sending out a combined loyalty card to 600,000 customers over the next few weeks. That card will offer the benefits of the loyalty schemes of both brands from a single card, with the retailer planning to test the impact before making a decision on whether to roll it out more broadly.
“[There is a] growing connectedness between the two brands. And on loyalty we are taking steps in that direction with 600,000 customers receiving a combined card that will work across both brands. This is an initial step only and we will be building on that. We see a great opportunity to link both brands together,” he explained.
JLP has traditionally kept its brands very separate but is working to more closely align the two. This is most obvious with a rebrand of the two businesses to John Lewis & Partners and Waitrose & Partners and the launch of their first joint marketing campaign.
Mayfield said the rebrand has “gone really well” and he is encouraged by the reaction so far. On the marketing campaigns, he points to more than 10 million views of the ad and the response on social media as key indicators that it has landed well.
“A key area in modern marketing is the network and transmission effect of creative. [Online views] are up on previous campaigns at this time of year and it has been shared tens of thousands of times, with 99% positive sentiment. We’re pleased with those outcomes,” he added.
Sticking with Never Knowingly Undersold
Despite the promising impact of its rebrand, JLP is facing challenging conditions. In its half-year results, released today, profits for the partnership were down by 99% year on year as margins, particularly at John Lewis, were impacted by low consumer confidence, weak sterling and an “extraordinarily” promotional period.
The ongoing troubles at other department stores such as House of Fraser and Debenhams have led rivals to significantly cut prices to shift stock. And John Lewis has had to price-match all those promotional events due to its Never Knowingly Undersold price promise.
That has caused a £40m hit to its profit margins. But Mayfield said the company has no plans to scrap the scheme, saying it is a promise to customers in good times and bad, and that at a time when it is easier than ever to compare prices across retailers, it is a key sales driver.
“This is the most transparent market we have ever known, the ability to price-compare has never been greater. If you are a long-term business like ours that wants to form deep relationships with customers, having a commitment to offering value and good pricing is a foundational point in that,” he explained.
“Never Knowingly Undersold is the most comprehensive price promise in the market, no-one else has anything quite like it. There is value in the trust customers have as a consequence of it, and it has proven to be so over many years. The fact is, times like these test the real integrity of the promise but we can’t just [offer it] in good times, we have to be up to it in tougher times too.”
If you are a long-term business like ours that wants to form deep relationships with customers, having a commitment to offering value and good pricing is a foundational point in that.
Sir Charlie Mayfield, John Lewis Partnership
Nevertheless, John Lewis is taking steps to reduce the impact of Never Knowingly Undersold by selling more products that are not comparable to rivals’. It has an aim to have 50% of its range be own-brand or exclusive and says those lines are seeing higher growth than branded items, particularly in womenswear and home.
At Waitrose, meanwhile, a new development kitchen is “fuelling product innovation”.
“If you look at our strategy, it is to be more different than we are today, less comparable,” Mayfield added. “This is not just about price comparison, it is about a strategy to differentiate.”
The troubles on the high street are clear – with rivals struggling to generate sales and profit growth. Mayfield admitted it is a “really tough market”, and said retailers must not forget that people haven’t fallen out of love with shopping but they must be given a reason to shop at a particular retailer.
“Customers want distinctive produce and service, and we do that in a convenient way that works across all channels,” he said.
“Being a department store doesn’t give one an eternal right to exist. Department stores that innovate, change their proposition, move with the times, offer people what they want will thrive. We are determined to be in that camp.”