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John Lewis is expected to reveal the extent of the damage he suffered during the pandemic on Thursday, with his first annual loss and confirmation of his intention to close more stores.
The figures will be examined carefully. The staff-owned group, which also owns Waitrose, is seen as an indicator of the high street and these will be the first results that outsiders don’t already have a clear indication of from recent exchanges. Indeed, in January 2020, John Lewis kept his weekly sales updates, which until then were mandatory for competitors and analysts.
Waitrose’s performance will likely be flat, but the department store image will be bleak. John Lewis booked a £ 470million depreciation in September, and online sales will not have fully offset many weeks of forced store closings. Instead of encouraging staff to welcome their annual bonus, the image of workers on leave is comforting themselves online because John Lewis has removed the annual payment from his employees for the first time in 67 years.
It’s a painful birthday for new boss Sharon White, who arrived just before the pandemic. Under his leadership, the group made difficult decisions: to close eight department stores and several supermarkets and cut more than 1,500 head office positions.
White will likely highlight the costs of doing business in the event of a pandemic on Thursday, amid outcry over the group’s refusal to reimburse the government’s business rate relief on its supermarkets; major grocers reimbursed the benefit after food sales exploded during the pandemic.
To underline his pain, John Lewis will point out that he is discussing with the owners of the closing of eight other department stores. Stores will not be named this week and plans can be changed depending on how the talks go, but a smaller chain, selling more online, is ensured.
With locks showing how many shoppers are happy to check out fashion, home style, or nursery kit from their couch over the phone or video conference, the future of the physical department store has never been better. uncertain. The downfall of Dorset-based Debenhams and Beales, and the sacking of House of Fraser, shows how bleak the outlook is.
It may seem wrong for White to make such bold decisions at a time when behavior has changed so drastically. Why get rid of the stores when the main rivals are pulling back quickly, landlords have never been more open to reduced rents, and local authorities are ready to help keep their main streets alive?
Patrick O’Brien, retail analyst GlobalData, said John Lewis didn’t need to wait and see how buyer attitudes have changed to know the economy isn’t adding up anymore. But he suggests that a physical withdrawal from city centers could make it harder for John Lewis to maintain his point of difference – superior customer service backed by ownership of company staff.
“John Lewis’ price premium is tied to his high-end store experience,” O’Brien said, “and once that is taken out and two-thirds of the business is online, I wonder. if it can maintain its differentiation. “
A abandonment of its pledge to never knowingly under-sell (details expected later this year), no more outsourcing of customer service, loss of staff bonus, and now store closings … has a risk that John Lewis will start to feel less “special”, and more like just another retailer.
But aside from making sure the beloved Main Street brand stays special, White’s challenge is to make sure it stays in existence.
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