Waitrose - stability in a time of crisis
21 January 2020
Waitrose and John Lewis issues
It's staggering that despite the Waitrose chain seemingly losing its way slightly in the market, sort up rising up the league table, before falling back to mid-table, the look like a bastion of strength and consistency versus the debacle that is going on at the wider John Lewis business.
Management issues galore, the loss of both MD's, loss of a fair few senior managers also, the loss of the supply chain director for Waitrose alongside the director of shop trade means that Waitrose is light on management capability in a very competitive marketplace.
As the enlarged group takes the first joint steps under the new chair, Sharon White, herself, very capable but without a retail background, it looks like more than a challenge....
That said; given the debacle that has occurred under executives with retail experience, the lack of a retail background may well prove to be a positive, rather than a negative. But White inherits a real hospital pass, Charlie Mayfield has presided over restructures and a fall in profits at John Lewis, where the rhetoric was all about a restructure and then a solid base from which to grow, whilst losing both Andy Street and Mark Price alongside Rob Collins and Paula Nickolds (their successors) in his tenure.
The John Lewis profit fall and stated restructure was perhaps understandable as a 'reset' under the new MD until you realise that January 2020 yielded another disaster in terms of profits and sales growth stalled again, Paula Nickolds departed (which seems a huge disaster for the chain, bigger than anyone else I'd wager) despite she having inherited a raft of issues, with barely any time to make any notable change before being shunted into a watered-down role on an enlarged board in any case.
The new board which has no real food representation beyond Rupert Thomas, despite both businesses being as different as you could have imagined in terms of actual, physical retailing.
Not least lead times, frequency of shop, short coded products etc. Rupert Thomas (head of trading) has been promoted to be MD in chief essentially of both John Lewis and Waitrose food/grocery, but his remit is large and it remains unclear who runs the shops and monitors standards? If anyone from John Lewis came across (seems that would be the case) they would need at least 6 months to get up to speed on food.
It's that different.
Where will the lines of communication be and who makes the decision on any investment? How quick can decisions be made? Food is so much quicker and you wonder if the future partnerships will be geared around saving John Lewis despite their self inflicted issues.
My money would be that John Lewis will get the majority of any investment as they're well represented and also, seemingly need the boost.... Trafford Centre JL, for example, is old hat now, but what cost is a refit? £10m minimum. You could do a fair job of refitting 3/4/5 Waitrose stores for that.
Did the business really need a combined "and partners" moniker (then to put it all over the stores without necessarily refitting them, it looks folly) to have Edgar in both John Lewis and Waitrose stores? Of course not.
My local store has had parking signage updated around the externals of the site, featuring the new look/feel, but the sign above the door hasn't been changed to feature "& partners".
Do customers care? They know they can get their John Lewis parcels sent to Waitrose to pick up in-store, perhaps that's enough.....
The bonus looks likely to be zero this year and perhaps going forward, it'll be more of a struggle and Waitrose, who have taken their medicine in terms of restructures, refining the way they work (in a competitive marketplace) whilst selling stores off to Lidl amongst others, are now propping up the wider John Lewis business.....
A business which will seemingly continue to persist with "Never Knowingly Undersold" despite price being just one reason as to why you'd shop with JLP. In the heady days of Amazon, online retail and Black Friday etc is near suicide.....
Their marketing needs to be bolder, less subtle and more focused to talk about the differences, positives and benefits of shopping at John Lewis. Not just the partnership model (which likely means nothing to many customers and isn't a driver, necessarily on its own) but the wider service levels, longer guarantee etc.
That is assuming that cost cuts haven't taken care of any flex in the stores in the pursuit of low prices or price matching.
If not - you stand for nothing. Just trying to take on the likes of Amazon et al on price is madness, especially when you have overheads like John Lewis.
I noted the chairman said that you had to keep 'never knowingly undersold' as price was vital etc, but that's too generic and misses the wider point.
The key element has to be that you are not found to be charging insult prices versus the market, you offer 'value' (which is more than just price). There would be times where you chose to price match a category or promotion (even advertising that like they do today in-store) and there would be other times where you tolerated a gap of say 8-10%.
This boils down to the fact that John Lewis haven't properly defined what 'never knowingly undersold' means, beyond price that is. Thus don't move away from price as a staple. They seeingly are unable to articulate to a customer why you should shop with them over someone like Amazon or Mamas and Papas (eg).
In terms of differences - the chairman said in a This is Money article in 2018 that he felt comparisons of struggles on the high street between themselves and House of Fraser etc were unfair, as their stores were 'different'. But how different? Do customers know?
So this encouragement of behaviour around John Lewis being almost purely price centric, when the chain should be anything but that remains one of life's great mysteries.
It's frustrating to a layman like myself, given their heritage, the name, the locations of stores or the products they sell. Considering the service from the long-standing partners and the specialism that should all come from how the partnership is operated and how the business is run hasn't been translated into a strong marketing campaign. Reasons to believe almost.
One that isn't just dependent on JL price matching Amazon for Black Friday and transferring all their sales, needlessly to 6 weeks before Christmas whilst giving discounts at the same time.
Price whilst important is never the sole driving factor of purchase. It's always about more than just that.
Yet the more that John Lewis cut away at the other important elements (IE what should make up never knowingly undersold, added service in stores plus whatever else they have chopped) to protect a misguided notion about it being just about price, the more John Lewis will drift away achieving near-zero margins in the pursuit of what frankly, is a dream.
No images this time and perhaps more John Lewis than I intended as well. But these are tough times for retailers and you have to be on point and ready to deal with what comes your way, alongside trying not to punch yourself in the face.
The market won't stand still, Amazon don't have a month off because the "future partnership" is going live soon and we owe them a favour.
The near-obsession with an internal John Lewis restructure that your average customer doesn't even know about, less care about has translated into disruption at the shelf edge. Not good enough.
More to come on Waitrose, whilst they're now the model of consistency against their trendier sibling (who has gone off the rails in recent months).....
Versus their compatriots there remains a lot of work to do.........
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From the Grocery Insight newsletter archive, first sent to subscribers on 21 January 2020. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.