John Lewis, the venerable British retailer which also owns upscale supermarket chain Waitrose, is in trouble.
The partnership, it’s a mutual, lost nearly 27m in the first half of 2019 following zero profit in 2018. Whatever magic adam&eveDDB comes up with for its Christmas ad campaign it’s unlikely to make a profit this year too.
Outgoing chairman Charlie Mayfield says it’s sticking to its strategy which is based on what these days is the ultimate high street folly – that John Lewis is “never knowingly undersold.” Mayfield clearly doesn’t want to be the JL boss who ditches this. Incoming chair Sharon White (below), formerly of telecoms regulator Ofcom, surely knows what she need to do.
Promising to match other high street prices (when you’re aware of them, which is a bit of a weasel) may have been sensible in the past but it’s anything but now when the British high street is full of discounters. One of JL’s biggest rivals is Mike Ashley, owner of Sports Direct and now House of Fraser and much else besides. Ashley is a discounter even though he said at the time of buying HoF that his vision for the chain was to make it the new Harrods (HoF used to own Harrods back in the day.) HoF has been a disastrous buy and soon it’ll be full of cheap trainers if it isn’t already.
John Lewis doesn’t need to play on this field. Never knowingly undersold stems from the days when ‘sales’ were the January sales. The TV news used to show people queuing overnight to buy a cheaper washing machine or whatever. JL had to match these prices for a couple of weeks at most. Then came the summer sales, now it’s all year round.
So White, who’s a good interview performer, needs to get rid of or, at the least, severely adapt this price promise as soon as she can – and explain why. JL customers don’t go there because it’s supposedly cheap anyway. Their pitch is a mixture of quality, value and service, some elements of which are suffering as the screw tightens.
If she doesn’t Mayfield’s legacy may prove disastrous.