Interview Streetsahead


Already recognised as a multichannel leader, Joanna Perry speaks to John Lewis managing director Andy Street about why store developments are crucial to the retailer’s future plans


We have become Britain’s best multichannel retailer,” says John Lewis managing director Andy Street.


However, he quickly adds modestly: “Others say that, not just me.” And indeed they do. On a freezing cold morning, Street is in fine spirits, despite


a manic schedule in the run-up to John Lewis’ results announcement. It is likely this good mood is an indicator that the business is on track to add to its impressive financial track record. Street has been at the helm of the business since 2007,


having spent his entire career there. But under his manage- ment, the multichannel offer in particular has come along leaps and bounds. John Lewis is the retailer that its pure-play etail competitors fear, and the one that other clicks-and-bricks competitors are increasingly trying to emulate. While not always the first to launch a new proposition or


service, it’s always among the early adopters, and the Partner- ship bet early on the internet with its purchase of the UK business of electronics etailer Buy.com in 2001. “In a tough market our dot com operation has continued to grow well ahead of the market,” he says, adding that it is slightly surprising that a department store is challenging pure-play etailers in this market. What’s particularly interesting about the business is that it


remains committed to physical retailing as part of its multichannel proposition, and with a relatively small store portfolio is in a position to still be considering significant growth in space, albeit with new ideas and new formats. So how does Street plan to keep up the multichannel momentum that John Lewis has achieved?


Billion bonus In its interim results for the first half of 2011, the retailer had reported online sales up more than 27% – in comparison industry body IMRG saw online sales for the sector grow 16% overall in 2011. The online offer already accounts for more than 19% of the retailer’s sales, and with further developments this could quickly rise further.


This is partly down to the ownership structure. As a part-


nership where everyone working in the business is also an owner it has been able to take a longer-term investment outlook than other businesses, and this has been important to its ability to react to structural shifts in how consumers shop. It is also down to the management of the business under- standing how mutually beneficial its different channels to market are to each other: the website supports stores, but increasingly the stores support web growth too. By 2014, John Lewis hopes to be achieving £1bn in online


sales. Street explains how planning is done when the business faces such an accelerated evolution. “We only have a one-year detailed plan. But we also have a 10-year view of how the market is likely to develop,” he says. While the financial plans for each year are only finalised a year ahead, Street is happy that the business has correctly called all the long-term trends that have occurred in the past decade. So it has invested in new digital ways of shopping, but with


a relatively small footprint there is still room for growth in its physical presence too. The business invested £75.7m during the first half of 2011 in a department store at Westfield Strat- ford City, two John Lewis at Home stores, and three store refurbishments including at its Peter Jones department store. Street says as well as his customers buying more online,


the retailer understands how important the website is to driving traffic to stores. This is thanks to the growth of its click-and-collect service, but also the trend for customers to research products online before coming to store. He says John Lewis has worked out that “60% of shop purchases are researched online”. While the retailer has retained the support of the consumer segment that might be considered the traditional image of the John Lewis customer, Street says the growing customer base has also become “younger and more ethnically diverse”. This plays well to its multichannel offer. For instance, its Stratford store has a customer base that heavily features what Street describes as “educated urbanites”. Tending to be under the age of 35, they live in a metropolitan area, might not own their own home and care about fashion and travel.


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