Displaying items by tag: Waitrose

Wednesday, 26 August 2020 13:38

ChicGeek Comment Knowingly Fixing John Lewis

fixing John Lewis Waitrose chic geek expert comment

The department store sector is at a crossroads. It’s do or die time, and a race to right these historical businesses before the whole thing capsizes.

Left - The John Lewis in Birmingham is closing after only 5 years

John Lewis was always seen as a steady ship amongst the losers, like Debenhams and House of Fraser, made unseaworthy with oodles of private equity debt.

But, even John Lewis, the famous cooperative, is suffering in this retail storm. Is it time to batten down the hatches and lose its price matching promise? What can the John Lewis Partnership do to sail through?

John Lewis’ ‘Never Knowingly Undersold’ promise is a left over from a bygone time, much like its ‘Clearance’. Group chair, Sharon White, told the Sunday Times, last Sunday, she expected the price pledge to go. The famous promise to match rivals' prices has become harder to defend as competition from online retailers has become ever tougher and eaten into margins. The slogan is nearly 100 years old having been in place since 1925. "The proposition is important because it signifies being fair to society. We're reviewing it to improve it,” she said.

Pre-COVID, the John Lewis Partnership - John Lewis and its supermarket Waitrose - full year trading update for the 52 weeks ending January 25th showed operating profits dropped by 23 per cent year-on-year to £123 million, while pre-tax profit suffered a 25 per cent year-on-year decline to £146 million. Meanwhile, revenues declined 1.6 per cent year-on-year to £10.15 billion.

While core operating profit at Waitrose grew by £10 million to £213 million, it slumped by £75 million to £40 million reflecting weak sales in home and electricals, investment in technology and higher staff costs.  

fixing John Lewis Waitrose Birmingham chic geek expert comment

The staff bonus - the profits split between its employees -  was two per cent. The lowest amount since 1953 when staff received nothing.

Right - John Lewis' shiny Birmingham store was opened to great fanfare in 2015

Profits were falling at John Lewis’ department stores before COVID 19, and while sales at Waitrose would have increased, it is doubtful it would have made up the difference. So, what’s gone wrong at John Lewis?

Over Expansion - Many people might think John Lewis’ huge retail estate was a legacy leftover from a previous era, but it is worth noting nearly half, 24 of their 50 John Lewis shops, were opened after 2000. They weren’t a traditional legacy retailer and haven’t been afraid to close stores over the years. The Knight & Lee department store in Southsea closed in 2019 after more than 150 years, and was the first to be closed since 2006. John Lewis has announced the closure of a further eight stores including its shiny flagship in Birmingham, above New Street Station, opened only five years ago. This year between 60% and 70% of John Lewis's sales are expected to be online, compared to 40% last year, making a large number of stores harder to justify.

Waitrose has been lightly trimming its 338 store estate announcing the closure of 17 stores since June 2018 and a further three Waitrose stores are to go, at Helensburgh in Scotland, Four Oaks in the West Midlands, and Waterlooville near Portsmouth, later this year.

The company has said they were exploring whether excess shop estate could be used for new mixed-use affordable housing. White said she is talking to developers and investors about partnering to build flats, many of them affordable, on top of existing shops, starting in west London.

John Lewis has announced selling more Waitrose food in their department stores which would make good use of excess space and fill the in-town convenience many other food retailers offer as long as the opening hours are extended.

Lack of Convenience - As people shunned town centres and shopped local, Waitrose & Partners lack of convenience stores has become more prominent. Out of its 338 shops, across the UK, just 65 are "little Waitrose" convenience shops. In comparison, Tesco operates 153 Metro stores and more than 1,700 Express outlets. Sainsbury's Convenience Stores Limited (trading as Sainsbury's Local) is a chain of 770 convenience shops operated by the UK's second largest supermarket chain Sainsbury’s.

Waitrose has a 5.1% share of the food market, making it the eighth-largest retailer of groceries in the UK. These convenience stores can charge more for their restricted selection of products and would make Waitrose, perceived as more expensive by many, more competitive on pricing.

White told John Lewis staff, "We are looking at how we make our products available through other routes, reflecting the fact that Waitrose has a smaller presence in the convenience market than other supermarkets.”

Waitrose needs to extend its opening hours. Many close at 9pm which feels early in today’s competitive supermarket landscape.

Too Much Focus On Fashion - White told the Sunday Times the chain needed "more inspiration, surprise, fun" and that it would compete by "curating" items in store better. John Lewis would focus less on women's fashion and get rid of travel and spa services. Instead it would offer more financial, home and garden products.

John Lewis made a big push into the fickle and highly competitive world of fashion a few years ago, and, while it was the correct place for expansion at the time, it has taken focus away from its core home and electricals. During lockdown people have re-evaluated their homes and want to spend the money they would have spent on holidays and fashion on their surroundings.

It is worth noting that online electrical retailer AO saw annual revenues of £1.05 billion to March 2020, up 15.9% on a year earlier. AO’s customer base grew last year to nearly 6.5 million customers in the UK. This, along with many other online retailers, must have eaten into John Lewis’ traditional hold on the white goods market.

Waitrose/Ocado Loyalty Battle - September sees Waitrose’ 20 years relationship with online delivery service Ocado come to an end. The tie-up generated 6% of Waitrose’s sales. They are being replaced by Marks & Spencer.

Ocado has already said it has no spare capacity for new customers and it will be interesting how many stay loyal to either brand.

Waitrose has two online distribution centres - Coulsdon and Edmonton in London - to service their online orders and has an opportunity to poach customers from Ocado.

Ocado says it will stock 6,000 M&S products, compared with the 4,000 it sells as part of its supply deal with Waitrose. The alternatives would be the “same price or lower, and of the same quality or better” than the Waitrose ones, Ocado said.

Can Waitrose compete with the robotic efficiency of Ocado? Waitrose had enlisted Today Development Partners, a technology business run by Ocado co-founder Jonathan Faiman, to help grow its online operation without Ocado. However, the deal ended after just four months and it subsequently emerged Faiman, who left the online business in 2009, was being sued by Ocado. 

Online orders are always restricted by the number of vans, drivers and delivery slots. A Waitrose tie-up with Amazon Fresh has been rumoured to help with these online growth ambitions. It is predicted sales online with John Lewis to become a 60 per cent and Waitrose to rise to over 20 per cent.

Waitrose has too many disparate websites selling flowers and gardening products, and should push these all into one site and delivery option. It should also link John Lewis and Waitrose more.

Too Expensive? - Walk into a John Lewis or Waitrose and it feels like everybody shopping there has white hair. While the Boomers are an affluent demographic, the brands are perceived as being too expensive and aren’t engaging with younger or those who are more price conscious. It is particularly noticeable at Christmas with small gifts coming in much more expensive than competitors or what consumers are willing to pay. It needs to broaden its pricing with more prices at the lower end. It also needs to offer more exclusive products and give people a reason to pay more. It needs to think of places like TK Maxx as competitors.

Can Rental Replace Sales? - The company said it was considering creating a way for rental of its products and re-sale of used items. While everybody is going rental crazy, can John Lewis renting white goods and sofas make up sales or will it just cannibalise existing sales and be an expensive distraction?

Announced in August 2020, the items will be rented via a third-party site, Fat Llama, with the service available initially just in London but set to roll out nationally if successful. People can choose between 50 different items from the retailer’s range. Prices start at £17 a month for a desk or chair rented for 12 months, and rise for larger goods on shorter contracts.

John Lewis has said "fair value" would still be central to its ethos but "in a more modernised form” and it hopes to have a new slogan to replace “Never Knowingly Undersold” in place by October.

In January 2020, John Lewis stopped publishing its weekly sales figures, it was seen as a bellwether for the whole retail sector.

Department stores are suffering the most at the moment. Many of these issues were pre-COVID 19, but, like all retailers, it would have speeded up the need for change. John Lewis is a special example of a retailer which, luckily, hasn’t been saddled with a debt mountain. They have the opportunity to be the last national department store standing in the UK and could reap the benefits of high-street competitors disappearing, but that doesn’t change the challenges from online.

It sounds like John Lewis is moving in the right direction and making the right noises, but this cautious retailer needs to make some hard decisions. John Lewis is a retailer people would miss, they need to remind people of that. It just needs focussed adjustment rather than radical amputation.

Published in Comment

Department store rebrands John LewisMid-market department stores have become the punch bag for the state of modern retail. Often the largest, most visible and expensive stores to run, they are the cumbersome dinosaurs of the British high-street and, much like those, talk is about them dying out.

Two of Britain’s biggest department store chains, John Lewis and Debenhams, unveiled their rebrands on the same day, this week. Much like a first day at school, and a fresh seasonal start, this is their equivalent of a fresh text book and pencil case. But, will it be enough?

Left - John Lewis & Waitrose adds its Partners to their new logos

John Lewis is ramming home the fact it’s a big, fat cooperative by adding ‘Partners’ to everything. For the first time in the company’s history the names of both John Lewis and Waitrose have added ‘& Partners’. 

At the same time, they also unveiled the largest own brand womenswear collection of 300 designs, which was created entirely in-house and carries the new name ‘John Lewis & Partners’. Plus its first own-brand gifting collection called ‘Find Keep Give’. The range is comprised of unique pieces, the majority of which were designed in-house by Partners.

This is John Lewis really putting its stake in the ground for point of difference. The future, they think, is something desirable you can’t get anywhere else. Never knowingly sold elsewhere!

Department store rebrands DebenhamsRob Collins, Waitrose & Partners Managing Director said: “This moment is far more significant than simply adding words and changing the design. It symbolises something bigger, expressing what’s different about our business and signalling our intent to make that difference count for even more: committed, knowledgeable Partners who care about the business they own, sharing their love of food and offering great customer service.”

Right - All about the D at Debenhams

John Lewis Partnership said in June that it would continue to invest in both businesses at a rate of £400m-£500m per year, to enable the two retail businesses to differentiate themselves from other retailers by innovating in products, customer service and services with the creation of ‘Customer Service Ambassadors’ who provide warm and personalised customer service front of store. As well as healthy eating specialists, they are training Partners to offer a concierge style service and equipping ‘Personal Stylists’ with the skills to deliver daily fashion talks; as well as investing in technology to improve customer service. This will be hard for other retailers to match.

But, John Lewis is feeling the pain too. They just announced the loss of back office jobs in IT, finance and store security from its 50 departments stores with 250 roles affected. This reflects the recent plunge in profits, and the announcement in June that profits in the first half of the year will be "close to zero”.

On the other hand, Debenhams was definitely due a refresh. Devised by new creative partner, Mother, Debenhams has unveiled a “modern, friendlier logo”. A new media tag line “do a bit of Debenhams” invites customers to “celebrate their discovery of the brands and products they love”.

Debenhams chief executive, Sergio Bucher, said, “Whilst we have made real improvements to our stores and continue to improve our product offering we also want to signify overtly to customers that Debenhams is changing and give them more reasons to come in store – our new brand identity is a way of signalling the change.”

As part of the ‘Debenhams Redesigned’ overhaul, the online shopper journeys have been reduced by half and conversion rate improved by 20%. The first new logo in 20 years, Debenhams’ new look reflects the investment and changes that Bucher, who was previously at Amazon, has made.

Department store rebrands Debenhams

In June, Debenhams said full-year profits will be lower than expected - the third time it has issued a profit warning this year. The department store blamed "increased competitor discounting and weakness in key markets" for the profit shortfall. It said annual pre-tax profits would come in between £35m and £40m, below previous estimates of £50.3m.

Left - Debenhams new logo 2018

“Perhaps the rebrand for both these important retailers could be have been actioned earlier, but I am pleased to see that both Debenhams and John Lewis have now grasped the opportunity and wish them both well with the next steps. I am also encouraged to see that both businesses see the initiative as much more than signage and are taking the opportunity to look at every aspect of their businesses in terms of both the relevance and the importance of excellence in delivering goods and services to their customers.” says Michael Sheridan, CEO and founder of retail and brand design agency Sheridan&Co.

One department store chain that could possibly do with a makeover is the privately held Fenwick. The Newcastle-based department store chain is to shed 421 jobs as part of a cost-cutting plan following a slump in profits. The retailer reported, yesterday, it had not been immune from the struggles facing its competitors. It said management, support and shop floor staff would be affected by the job cuts - the result of a restructuring - taking its total workforce to 2,879 people.

Fenwick posted a 93% fall in pre-tax profits to £2m in the year to 26 January. They said a 3.6% fall in sales over the 12 months was a resilient result.

A spokesperson said: "Our annual results reflect the challenging market conditions all department store groups are facing, including increased competition from online retail, declining footfall on the high street, and increasingly competitive price discounting - factors that have been exacerbated by a rise in the cost of living that has led to a fall in consumers' disposable income.”

Fenwick is a small chain, with 9 branches, mostly in wealthy market towns. They have no e-commerce ATM, and, while they plan to, I think it could be too little, too late and they would be better off investing in their stores and “owning” the towns they are in. They need to remind us why we need to go to a Fenwick’s store. They should follow John Lewis’ lead and offer good customer service and product points of difference. It doesn’t have shareholders pushing for short-termism profits so should look longer term.

We’re still waiting to see what is happening with House of Fraser, but I’m sure we’ll see a new logo and branding there within the next 18 months. 

These department stores are using new logos to draw a designed line under the past with the aim to looking forward. They’ve been surrounded by negativity for so long and this must be hitting the morale of the staff and this is a way of saying “new start” and they are investing. 

There’s a lot of play for, but everybody needs to become leaner and faster, and many chains have no more meat left to cut. They, now, need shoppers returning and buying more. Only exclusive products or services they can’t get anywhere else will draw them back.

John Lewis has deep pockets and Debenhams’ survival could be at the expense of another chain. John Lewis’ classic branding didn’t feel tired, but maybe they thought it was important to change before it does, but I would have kept the original dark green colour. Debenhams’ new look looks fresh without trying too hard. It looks reliable and welcoming and does reflect the changes that have been going on in-store. Debenhams has come on massively over the last couple of years and it was a good idea to have a clear out of its “designers” - read more here. Now, it needs enticing, contemporary product to replace it.

The mid-market department store, as a concept, isn’t dead, but for the bad ones it’s the beginning of the end and no fancy new logo or slogan will fix that.

Read more expert ChicGeek Comments - here

Published in Fashion
Monday, 11 May 2015 09:18

Bulldog X Penguin

bulldog grooming penguin books fathers dayTheChicGeek is all for education and British grooming brand, Bulldog, has come up with a very novel idea - apologises - for Father's Day. Launching exclusively at Waitrose stores from June 10th, Bulldog’s ‘Classic Reads’ gift features a selection of classic British novels paired with four Bulldog skincare products. The limited edition ‘Classic Reads’ gift packs celebrate some of the finest writing in the English language with four treasured Penguin titles: The Time Machine (H.G. Wells), Strange Case of Dr Jekyll and Mr. Hyde (Robert Louis Stevenson), The Hound of the Baskervilles (Sir Arthur Conan Doyle) penguin books fathers day bulldog moisturiser waitressand The War of the Worlds (H.G. Wells).

Left - The Time Machine (H.G. Wells) and Bulldog Sensitive Moisturiser, 100ml - £5, Strange Case of Dr. Jekyll and Mr. Hyde (Robert Louis Stevenson) and Bulldog Original Moisturiser, 100ml - £5, The Hound of the Baskervilles (Sir Arthur Conan Doyle) and Bulldog Original Face Wash, 150ml - £5, The War of the Worlds (H.G. Wells) and Bulldog Original Face Scrub, 125ml - £5

Published in The Grooming Archives

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