TORPEDO AIMED AT THE HEART OF MIDDLE BRITAIN
IT’S one thing when shops like Poundworld, Maplin or even Debenhams run into trouble, but quite another when the retail carnage sweeping the high street strikes at John Lewis. John Betjeman famously said that if Armageddon ever came, he would head to Peter Jones, the posh Sloane Square branch of the chain in London, because ‘nothing dreadful could ever happen there’. Well, it has now. A 99 per cent fall in profits would be shocking for any retailer, but for John Lewis, it feels like a torpedo aimed at the heart of Middle Britain.
One financial analyst compared its downfall with the end of the Roman Empire, which may be a bit of an exaggeration, but there can now be no doubt at all of the scale of the crisis afflicting the high street. So how have things gone so badly wrong? Brexit may not have helped but it is not an excuse. A large part of John Lewis’s agony is self-inflicted.
The chain has in recent years developed a culture of complacency, born of its unique place in shoppers’ hearts.
Justified pride in its superior service has tipped over into arrogance to the extent it risks losing its legions of once unswervingly loyal customers.
The chain has over-expanded and diluted its once-prestigious brand. At a time when record numbers of Britons are shopping online, it has carried on regardless with a programme of store openings, with no fewer than 62 new John Lewis and Waitrose branches in the past five years.
Only this spring, it flung open the doors to a £33million emporium across 230,000 square feet at the Westfield shopping centre in west London and another outlet in Cheltenham will open this month.
Managing director Paula Nickolds’ big ideas have included sending staff to stage school, setting up in-store beauty spas and offering bikini waxes. Hardly the stuff that will have Amazon owner Jeff Bezos quaking in its boots.
Millions of pounds have been blown on a rebranding exercise which resulted in adding ‘& Partners’ to the John Lewis and Waitrose logos.
If the idea was to draw attention to its caring-sharing employee-owned business model, it now seems more than a little hypocritical at a time when hundreds of partners face getting their marching orders.
For generations, shoppers have loved John Lewis for its service and the reassurance that, if things went wrong, they would promptly be put right. Yet many were left fuming by a disastrous overhaul of the home furnishings division last year which meant customers could no longer call a store directly but were put through to a central hub and left on hold for long periods.
The company is also sticking doggedly to its ‘never knowingly undersold’ promise, even though it is becoming ridiculously expensive to honour because rivals are holding almost constant cut-price sales with bigger and bigger discounts.
It isn’t all John Lewis’s own fault: the high street is facing its worst crisis for a generation. The profitability of the retail sector has halved over the past five years – not surprising as nearly £1 in every £5 is spent online. More than 60,000 shops have closed since 2013, and more than 50,000 jobs in retail have gone this year alone.
JOHN Lewis’s business rates bill dwarfs that of Amazon and, because it pays its partners good wages and makes full National Insurance and pension contributions on their behalf, it is at a disadvantage to less scrupulous employers.
Its plight should be the decisive piece of evidence to Chancellor Philip Hammond in this autumn’s Budget to reform business rates and clamp down on tax-swerving online retailers. John Lewis matters. Not just because it is a middle-class favourite, but because its partnership model has until recently led to impeccable service and protected it from the ravages of the high street.