John Lewis - Never knowingly well retailed (3 June 2021)

3 June 2021

This is part 1 of a 2 part epic looking at John Lewis, I'm a fan of the adage that whilst this visit is just one store, it's one store too many.

It may not be reflective of the entire chain but it also may be the case that every store has varying challenges in similarity...

Either way - there are so many own goals here that you wonder if the partners and business are aware of their burning platform? They can't hope to keep closing stores down and manage diminishing returns, including navigating customers to a website that often has lines out of stock and where the logistics look dangerous in terms of margin.

Around Christmas time, we ordered a number of things next day with DPD for John Lewis, numerous packages / Toys / whatever else we'd ordered. They arrived with the same driver, but in 6 different packages.

Which means 6 different charges for the business. Multiply that by the volumes they will be doing and they are actively sending customers towards a channel that actually is harmful for margin. Accelerating their descent.

Of course, self help means they can alleviate such problems, but who is looking at any of this?

My experience with retail is that no one cares about the marginal gains, the 0.25% which when combined with a huge number of other 0.05% / 0.15% gains adds up over a year to a fair percentage of improvement.

Real, tangible improvement in the day to day that improves partners/colleagues lives is a must, but no one cares about it.

It's all technological gains so they can show the media around, or introducing some app or other software improvement to make things quicker but it never actually translates to the bottom line.

In the world of LinkedIn and the car salesman like tactics of people selling themselves, I wonder, does this drive the wrong sort of improvement?

It's far better to develop an app, or highlight a huge number saved on cost by removing staff with little care around whether it's sustainable or will ever stand the test of time, than it is to make a 0.05% improvement to the business and know that

a) It works
b) Whilst small, there's plenty more to go at.

But in the short term nature of the sector, people are not blessed like this and the panic sets in, but John Lewis are not a PLC, they tell us time and again they're a partner led business, a democracy, different ways of doing business. Better for everyone.

They're given a free pass with elements like Government support, business rates relief was given unilaterally at the start of the pandemic and Waitrose, like other retailers, benefitted from not having to pay the monies over.

Many retailers paid this back as they'd had a good year, Tesco kicked this off of course and despite the year being rocky in terms of margin mix and profitability (extra costs incurred etc), the rest followed suit.

The Co-Operative haven't paid their rates back given the costs they incurred, that is their right of course. It's another business that is run differently and had it been a few years ago, you could argue that the taxpayer was propping up the business.

However they're in a far better place now, and they were also affected by the closure of city centres, non essential trading and working from home orders, impacting their estate significantly.

For John Lewis, they were affected by the closure of non essential for sure.

They also had 300 odd Waitrose stores trading throughout, offering click/collect for the John Lewis business and ensuring that their wheels kept turning.

But they haven't paid the monies back, their financial status is pointed towards as a key reason, but this is self inflicted.

Their botched changes under the former leadership, continued strategical failures, closure of stores that are very new - highlighting a major issue with expansion and hurdle rates on stores.

The list goes on and on. But it's morally wrong for any business to keep government support in this regard, surely?

Especially one like John Lewis that is so different to the rest of the evil PLC, profit driven businesses in retail. They tell us about their ownership model, how great it is. The customers haven't enquired about it particularly....

It's a good thing, no doubt. But it has clear shortcomings. As we continue to see.

Just imagine if Tesco were refusing to pay their rates back after the big dividend paid out post the sale of the Far Eastern businesses. Imagine the headlines.

Folk are just looking the other way here.

JL badly need to pick up the pace, their strategy with "Anyday" looks like some activity to show that lockdown wasn't wasted with everyone working at home.

It's also so confused, given that it ranges from £4 tea-lights (serving to show how expensive they are versus IKEA et al) to a Baby's Cot at £180.

Why? What is the point?

Does research show that the John Lewis brand meant nothing? What is this brand supposed to do? Are people going to John Lewis to save money? No! They're going for an experience and to be looked after with quality product, with partners that care and shops that are moderately well presented and offer an element of idealism.

Not for a stencilled orange logo and the stereotypical wooden display kit to show how low price this range is (when it turns out that actually, it isn't low, at all).

An example of the "Anyday" brand used on tea-lights and then on a Cot at £180 is just crazy.

What are they doing?

Branding then moves to the territory of the Aldi biscuits example I hold up a lot. Their biscuits are good, Fox's quite clearly.

However the packaging still reflects Aldi alongside the branding of course. There's still that stigma around giving these as gifts, or indeed, sharing them with guests.

Whereas the leading brands are ideal for this, they put a lot behind their brands, which is why they're imitated too. Discounters drop in far more brands around Christmas and Easter Egg time now for a good reason.

Discounters also range a number of brands permanently, showing that brands clearly have a place, especially where own label can't replicate.

So why do John Lewis essentially punch themselves in the face here?

They are seemingly put their value / everyday branding on numerous lines where there's no need to, in all manner of categories. Baby (we'll cover tomorrow) is a great example. Just so unnecessary.

It's a new brand too! Where's the equity for customers with Anyday? It\s just beyond belief.

Anyhow - on with the visit - part 1:

Cosmetics were a focal point although the kit looks dated despite being reasonably new in terms of a store fit out. Better work noted at Boots and indeed, Superdrug with their lower rent model in terms of no staff to serve, but the kids are all in there!

The sellotape on the balloons set the tone nicely. as Warren Buffett says "stupid with the small things, stupid with the big things".

That isn't a huge crime necessarily, but it pales in comparison to what was found.

Abject retailing and challenges, not just for the store team, as it goes way beyond their efforts. Challenges for trading, merchandising, buying. marketing. product teams.

Everyone.

Need to get out of the bubble and in to stores, en masse. Does the partnership model allow for this? It's a burning platform after all, or is there a series of committees and meetings needed before anything can be signed off?

Standards however were woeful in part.

Bank Holiday Monday, early morning so these haven't been touched for days by a partner. Given the store closes early on Sunday; there was ample time to sort the display, it was a disaster with gaps everywhere.

Also notable was the bric a brac sale at up to 30% off. Near prime selling space and Neom candles and home fragrances (some priced over £100). Very poor.

Clearance is a huge issue, they have been closed due to lockdown, of course.

But you're kidding yourself if you think that these issues are purely post lockdown, it's occurred for years and just looks as though buyers and operations are too far from the reality of the matter.

Anyday was located just beyond cosmetics with a new display for the ranges, presumably this will change seasonally. But the prices are not necessarily stand out.

Is this supposed to be more every day price? What would the price have been usually?

No locator for further stock on signage either, so if you were looking for more than two cushions, or assumed that they were display only..... No sale.

The ground floor features a myriad of gifting, seasonal product and food gifting alongside cosmetics (and the Anyday display).

A number of Sports Day kits and other outdoor lines for the Summer were seen; the curious adjacency of the glass ornaments next to outdoor sports kit was entirely baffling.

Relatively prime selling space on the ground floor (given you don't need to use a lift, or escalator of course). But there was an empty display reserved for an upcoming campaign around 'exchange' or similar.

It looked like they were moving out, rather than generating any real anticipation.

Yes they have been closed, but clearance is a huge challenge, especially in Food. We have seen this in other years too. Lockdown should have allowed them to get this under control and clear it through.

Even if you can blame the lockdown. How can you justify still trying to charge £16.50 for a chocolate advent calendar in June?

Are these products not monitored centrally? Stores should be screaming about this stuff still floating around the store.

Lots of Easter lines too; this could have been shipped out to Waitrose, there are some reasons (no doubt as pointed out on Twitter) around shipping to other storers intra company and the rest.

But was there ever an ambition to clear these at a strong price and save clearance and overcome hurdles?

I doubt it.

Easier to blame Amazon.

Games are also featured in with food gifting and cosmetics, home fragrance and the rest.

However Toys are on floor 4 with the the baby category, they're just hidden here. I get the intention with the gifting ideas, but they're just too out of flow to matter.

High value, good margin product that customers would gravitate to John Lewis for; home fragrance continues to boom, especially given lockdown and people being in their homes for longer.

However the retailing of high value products isn't great either, the layout and merchandising was poor, there were boxes and other lines just left all over.

Gaps in the unit and the lack of guidance, signage and navigation was notable once again. Just entirely unclear what a customer should do, if unsure. You can ask a partner but they're not exactly stood on every corner.

Another empty unit was sited just behind the home fragrance category.

No idea what was supposed to be happening here.

Neom has a store just over the way from John Lewis; a lovely place with fragrance everywhere and a calming atmosphere, as one would expect.

The product in John Lewis is not treated anywhere nearly as well. There's no pride in the display, or indeed, any attention being paid either.

Sparse displays, half open packages and dirty outer packaging (gift boxes no less) is not going to drive sales forward.

Or indeed; see customers return....

Further examples of poor merchandising, poor retailing and the like here.

High value products, big brands and a great opportunity to drive sales either for gifting or otherwise. But it's just a mess.

In addition - the core plan and layouts are bad enough, no signage or explanation again.

That's without the challenges of the poor standards. Dust on the Candles etc. Basics.

More Christmas/Winter clearance with a mere £2 off. A mess.

The plan with the big box on the shelf is also ridiculous; £115 no less!

One small thing after another here. All builds up to a very negative picture (we're only on the ground floor here too)......

This is a permanent display of product via Godiva and other confectionery lines but it looks as though it could be a trolley that a partner was using to fill up the shelves with.

They have an abundance of space around the store to utilise better displays than this.

Zero branding and the product is too easily missed.

Some of the Anyday lines appeared in Candles here; on a side display so were relatively easily missed by customers.

Anyday is labelled clearly; some of their "House' range was also noted here; but the majority was Anyday.

An easy job to rebrand Candles for John Lewis but for a customer; does it make a difference?

Same product? Price points only highlighted further within the new range.

Which means it's all the more easier to compare the price too.

Easter Eggs in June.

Alongside a Gin gifting set that was damaged too.

Clearance? Signage? Just leave it there?

Pet is so difficult to do well with these tiny units; they can't hope to display the product properly, so again, central teams to blame?

Did anyone build the plan in the real world? They would have seen the issues of stock being everywhere when it's filled if they had done......

There's some good product but there's no room for the product to breathe on shelf, which makes it harder to be seen by customers.

Hard to believe they've sold these in the first opening hour, another example of areas being neglected and given the model and positioning of the chain, it's unforgivable.

Hotel Chocolat had a display within the gifting area; it looked well.

However a significant number of lines were dated best before end August '21.

Warm weather generally sees Chocolate sales fall, so there needs to be a clearance/reduction plan in place here. Not waiting around for hell to freeze over.

Part 2 tomorrow features Toys, Kids and Baby - which were poor. To say the least.

There's so much self help available and they're not making any meaningful strides towards any semblance of a plan to my mind.

The strategy - closing stores, developing white labelled financial products (with no expertise) and then building social homes (very difficult, even harder when you have zero experience in doing so) looks questionable.

Even for the most positive person.

However, I'm grounded in reality. I visit stores as a customer, anonymously and give my feedback. I know what I'm doing in this regard.

No royal visit with advance notice means you see the store for what it is and what the customer experiences.....

That's the only way to progress things, grounded in both reality and the truth of how things really are.

The strategy doesn't need explaining to me, or indeed, any other customer. It should be clear as day in the stores.

If it isn't, then you have a major problem.

Join today for part 2 - Major issues in the Baby category

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From the Grocery Insight newsletter archive, first sent to subscribers on 3 June 2021. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.