John Lewis pledges ‘significant’ marketing investment despite first half-year loss

The John Lewis Partnership says it will continue to invest “significantly” in marketing to make sure customers “appreciate and understand” its brands.

John Lewis and Waitrose will continue to invest “significantly” in marketing, in spite of their parent company warning of the “significant” impact of a no-deal Brexit and profit pressures that have seen the business post its first ever first-half loss.

Speaking on an earnings call this morning, Waitrose’s managing director, Rob Collins, told Marketing Week: “We continue to invest significantly in our marketing budgets because we believe so passionately and strongly about what our brands stand for.

“Clearly, in a very competitive market place we want to make absolutely sure customers appreciate and understand all our brands can provide them.”

Revenue for the John Lewis Partnership (JLP) slumped £46.1m to £1.62bn in the first half of 2019. While profits at Waitrose rose by £14.1m to £110.1m, John Lewis’s profits declined to an underlying loss of £61.8m – more than triple the £19.3m loss made in the same period last year.

Like-for-like sales also declined across both arms of the business, down 1.8% at John Lewis and 0.8% at Waitrose. Waitrose’s online business, however, has grown 11% year on year.

We continue to invest significantly in our marketing budgets because we believe so passionately and strongly about what our brands stand for.

Rob Collins, Waitrose

The increased investment in marketing, employees and innovation is a key part of the John Lewis Partnership’s strategy to compete through differentiation, rather than scale, which last year saw both brands add ‘& Partners’ to their name and carry out their first joint marketing campaign.

Is John Lewis and Waitrose’s joint marketing strategy working?

While it would not give much away about how that has gone so far, JLP says it is looking at further opportunities to bring John Lewis and Waitrose closer together – both in terms of marketing communications and promotional activity, as well as the “opportunity for customers to see the best of both brands together”.

This includes a joint loyalty scheme, which John Lewis and Waitrose have been trialling over the past 12 months. Collins says there is a “significant team” working on bringing the schemes together completely, which customers will begin to hear more about in 2020.

Going forward, JLP chairman Sir Charlie Mayfield said the business will accelerate its focus on customers and innovation, as well as employee development – the “key signal” behind the rebrand and launch of & Partners last year.

“While we have pursued a defensive financial strategy very deliberately, we’ve pressed on with innovation, change and investment in partners and the future, and that’s really evident within this first half,” Mayfield said on the call.

“We see this as a really distinct difference between us and some of our competitors during tough times. A lot of people go very defensive across the board, we have not done that. Customer service standards have been maintained or enhanced. We have invested more in partner development than ever before.”