John Lewis is looking to “reinvent” its high street stores and significantly improve the customer experience following a “challenging year” that saw profit decline by 22%.
During its annual general meeting today (8 March), Charlie Mayfield of the John Lewis Partnership admitted that margins were under more pressure than anticipated as a result of subdued consumer demand, political uncertainty, a weakened pound and structural change, but said the business will be “upping the pace of innovation” this year as it prepares for the future both on- and offline.
“Expect to see more focus on the customer, more focus on innovation,” Mayfield said. “We’ll be bringing some bold moves for both our brands over the next 12 months. There’ll be a greater emphasis on partners being at the heart of delivery of real value and experience for customers and there will be more innovation on product and service.”
At the end of last year, John Lewis launched its first experiential store in Oxford – a concierge-style introduction to John Lewis that helps customers “make the best” of their visit to the store – and said it will be rolling more of these out across the wider estate this spring.
“Shops play a really important role in the physical manifestation of our brand,” managing director of John Lewis Paula Nickolds explained. “Customers are increasingly looking to not just shop everything, but do everything in our shops.”
Nickolds said John Lewis is currently testing a range of new ways to enhance the shopping experience that it will look to roll out “very quickly” if they work from a customer perspective – and that we should expect to see a “continual stream of new experiments” as the year goes on.
John Lewis said it had also seen a “significant acceleration” of growth online, with e-commerce sales up 10% compared to 3% growth in-store. As such, it is on the cusp of moving all online content onto a responsive platform that will give customers a more “seamless” shopping experience across devices.
Meanwhile, at sister brand Waitrose, the focus is on a new loyalty scheme that can offer a more “tailored experience”. The move comes after the supermarket decided to close part of its loyalty scheme, Pick Your Own Offers, at the end of last month after customers found it too confusing.
“Pick Your Own started out as a really enticing idea – customers value what they choose so let them choose their own promotions, which we thought was quite ground-breaking. What customers then told us was actually they wanted us to do the work and over a period of them they found they didn’t want to do their own picks,” Waitrose managing director Rob Collins explained.
“So what we’ve moved to is something called Just For You where we’re able to offer much more tailored and personalised offers for customers, where we’re doing the work and giving those offers that are tailored to what we know they like.”
Waitrose said the initial response to that has been “really positive” – but ultimately it will be looking at whether it increases customer spending and long-term loyalty.
The focus on the customer experience and loyalty comes after a difficult 2017 for the John Lewis Partnership. The profit fall was largely down to a weak sterling causing inflation. This resulted in the cost of many items increasing three times faster than retail prices; for example Waitrose Essential butter saw cost price increase by 200% compared to a retail price increase of just 36%.
The drop in profit forced the company to cut its staff bonus for the fifth year in a row to its lowest level in 63 years, at just 5%.
However like-for-like sales across the group were up 2% year on year, with increased numbers across both the John Lewis and Waitrose brands.