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What do the latest John Lewis store closures say about the retailer’s multichannel strategy?

Everyone wants something different from retail

The John Lewis Partnership says it’s rebalancing its store estate to reflect the way that customers now want to shop as it announces that eight more stores will not reopen from lockdown. We take a look at the development of its multichannel strategy so far – and where it goes from here. 

The retailer previously closed eight stores at the end of the first Covid-19 lockdown, a year ago, taking its total from 50 to 42 shops. The current eight closures will take its total from 42 to 34, which will start to reopen from April 12. In total, 1,465 jobs are at risk as a result of this second round of closures. At the same time, the partnership is to transfer the Waitrose Distribution Centre in Leyland to XPO Logistics. 

The stores that are to close are John Lewis’ four ‘at home’ format shops in Ashford, Basingstoke, Chester and Tunbridge Wells, and four department stores in Aberdeen, Peterborough, Sheffield and York. John Lewis characterises the closures as moving out of locations that can’t sustain a large store, while also closing smaller ‘at home’ format stores where other John Lewis or Waitrose branches are relatively close by. At the same time it says it will create more places where shoppers can buy John Lewis products around the UK. It has previously shown how it is testing different ways of placing Waitrose products within its stores

Sharon White, chairman of the John Lewis Partnership, says: “Today’s announcement is incredibly sad news for our affected partners, for our customers and for the communities we’ve served over many years.

“The high street is going through its biggest change for a generation and we are changing with it. Customers will still be able to get the trusted service that we are known for – however and wherever they want to shop.” The retailer says it will support staff who are made redundant, following consultation, to find other roles within the business – as happened for about a third of the staff who lost their jobs when the previous eight stores closed – or support them with retraining.

John Lewis’ multichannel strategy

John Lewis’s strategy is now to “reshape our business in response to how our customers increasingly want to shop in-store and online,” – and the business now expects that up by 70% of John Lewis sales will take place online in the future. About half of its customers use both stores and online when buying. This week’s announcement is the latest step in its five-year strategy to get closer to its customers through virtual, digital and delivery services. 

The news can also be considered in the context of the longer-term quest by department stores to work out how to stay relevant at a time when their customers were shifting online faster than those in other categories even before the pandemic. That shift has now accelerated as shoppers are now more likely to be working from home – a trend that is likely to outlast the pandemic – and as retailers have expanded their delivery and collection capacities, making the reality of online shopping ever more convenient for shoppers. John Lewis has expanded its own collection network beyond its own group with partnerships with traders including the Co-op.  And before Covid-19, it was also experimenting with bringing shoppers into its stores through a customer experience-led strategy, demonstrated when it opened its Southampton shop in November 2019, months before the outbreak of the Covid-19 pandemic. 

This latest announcement sees John Lewis continue to expand its click and collect service, as well as continuing its focus on in-store services and experiences. It also plans to launch still smaller, local stores, and will put more John Lewis ranges into branches of Waitrose.  

Pippa Wicks, executive director for John Lewis, said: “Closing stores is the toughest thing we do as a partnership because we all own our business. If the closures are confirmed, every effort will be made to find new roles for partners and for us to continue to serve our customers by providing access to John Lewis in different ways.

“Alongside a growing online business and the expansion of next day Click & Collect, we will invest in our in-store services and experiences, as well as new, smaller neighbourhood formats and the introduction of John Lewis ranges in more Waitrose shops.” 

Industry reaction

Elliott Jacobs, director, digital marketing at LiveArea EMEA, says: “The pandemic’s changes to shopping habits, and likelihood they are here to stay, have made physical stores a burden. Anyone watching will realise digital is now the key priority for the new landscape, and those companies which fail to invest in their online capabilities will not stand the test of time. 

“John Lewis has long been known for its superior service and a quality selection, and the high street stalwart will need to ensure these core values are not lost in its move to digital or risk becoming an expensive Amazon.

“Recognising a reliance on bricks-and-mortar was unviable in the long-term, John Lewis should have cut its stores once and deep. Whether John Lewis’ reinvention will pay off remains to be seen, but this death by a thousand cuts approach of continuous store closures rarely saves a business.”

Melissa Minkow, retail industry lead at CI&T, says: “This is one of the first instances where reducing store footprint could be considered a sign of success. So often, the story becomes that retreating a bit from the brick-and-mortar scene is a sign of defeat or struggle. John Lewis, however, is a cornerstone retailer in British shoppers’ minds, and despite waning department store relevance, its online platform has sustained its go-to reputation. 

“It is highly strategic and intelligent of John Lewis to shift focus towards digital innovation, as we know that the narrative behind the retailers that have struggled over the last few years centres around a lack of investment in digital. In this specific case, I’d urge observers to think critically about whether or not all brick-and-mortar store closures are a sign of failure. For John Lewis, this could very well be the beginning of a business model more reflective of the times and resonant with how consumers are shopping.”

And Alex Jay, head of insolvency at Stewarts law firm says many other retail and hospitality businesses are likely to reduce space even as Covid restrictions ease – inevitably leading to disputes

He says: “As the Covid restrictions ease….the change in retail and hospitality premises use, will come firmly under the microscope as we have seen here with John Lewis, and we saw also recently with Thorntons. It will be a zero sum game for many other businesses in a similar or even more challenging position, who may have to reduce space or face insolvency – this will drive more aggressive stances being taken, and inevitably disputes. The question is whether the landlord, or the tenant company, will come out on top.”

Marcel Hollerbach, CMO of ecommerce software company Productsup, says: “John Lewis’s renewed focus on its online operations is yet another sign of the lasting impact that the Covid-19 pandemic has had on our shopping habits and the high street. Their new strategy makes sense in the current retail climate, enabling new investment into ecommerce operations and capabilities, while maintaining a foothold on the high street with the planned opening of smaller outlets in Waitrose shops. In doing so, it’ll be able to reach more customers and markets, without alienating its core customer base.”

John Lewis is a Leading retailer in RXUK Top500 research.

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