John Lewis sets out five year recovery plan
John Lewis aims to be the number one destination for home and nursery, with electrical home technology central to the offer, as part of a five year plan to boost profitability.
It will will relaunch its home range in the spring and introduce more affordable price points. ‘This will reinforce fair value to broaden our appeal to more customers, recognising shoppers are especially cost conscious at the moment,’ it says.
‘The nature of the partnership model allows us to invest with a longer-term perspective than a conventional business, even in challenging times and amidst a very uncertain economic outlook. With this in mind, our five-year plan is self-funding and takes into account uncertain trading. The Partnership Plan sees our business continuing to adapt rapidly to changing shopping habits, getting closer to customers online and in-store. We’ll also expand in new areas where we believe our values can be a force for good,’ it says. These include rental, recycling, savings, insurance and private rented and social housing.
It will invest in virtual services such as personal styling, home design and the John Lewis Virtual Christmas shop.
It has brought forward its plan to be net zero carbon by 15 years to 2035.
It says it will lead the ‘made to last’ movement. ‘We’ll do more to ensure our products can be loved for longer and today make three bold commitments: all product categories will have a “buy back” or “take back” solution by 2025; all key raw materials in our own-brand products will be from sustainable or recycled sources by 2025; and we’ll develop sustainable rental and resale options for customers.
‘First-class customer service delivered by partners is our unique strength. We know it’s not always been as easy as it should be to shop with us, so we’re first investing to deliver a fantastic experience - online, on the phone and in-store. We’re committing £1bn over five years to accelerate our online business and transform our shops. This will make it easier for customers to shop with us on our websites and apps, and provide more convenient delivery options. And we’re modernising Waitrose and John Lewis shops so we have the right space in the right place. We’ll do this by aiming to save £300m per year by 2022, making our operations and head offices simpler and more efficient. Making these savings is crucial to free up money to invest and to deliver our plan.’
When it expects group profits to reach to more than £200m, it will pay staff the Real Living Wage. It will also aim to pay a bonus when profits exceed £150m and its debt ratio falls below four times. ‘Backed by a renewed focus on service and cost savings, the Partnership aims to see profits reach £200m in the next two years and £400m by 2025.
‘We’ll make John Lewis more accessible locally in different formats, building on significant expansion in Click & Collect. We’ll soon have 1,000 locations - through shops and collection points - to buy or pick up our products to reflect changes in how people are shopping with us.
‘We’re investing in data analytics and loyalty plans across our brands to reward and develop deeper relationships with our customers. Substantial customer research is under way to inform our new value pledge, which will be announced next year. Never Knowingly Undersold remains in place until then.
‘John Lewis’ focus is on meeting the needs of families with a variety of products, services and celebrations all under one roof and online. As shopping habits continue to evolve, we’ll become a 60-70% online retailer by 2025, alongside our inspiring shops. After the first phase of improving customer service in our core retail business, we’re committing a total of £400m to grow in new areas where we are trusted and which fulfil customers’ needs. We’re also doing so because tightening retail margins in the long term won’t allow us to pay the wages we would like, or invest in our customers and communities. We're targeting 40% of our profits from new areas by 2030,’ it says.
‘This is a bold plan to grow our business and get us much closer to our customers. Waitrose and John Lewis are two of the country’s most trusted brands and we’ll offer the best products and customer service on the high street and online. We’re creating new inspirational services for customers where strong ethical values and peace of mind matter, like reusing and recycling products, personal savings and rented housing. Our plans will firmly establish Waitrose and John Lewis as the go-to brands for customers that care about quality, value, and sustainability,’ says Nina Bhatia, John Lewis Partnership executive director of strategy and commercial development.