John Lewis widens services and targets £200m profit
John Lewis: responding to change
John Lewis and Waitrose are planning to strengthen their partnership by expanding into recycling, savings, insurance and private rented and social housing.
The company’s five-year plan will also involve more investment in virtual services and delivery capacity, as well as acquisitions to expand the brand in areas such as horticulture.
Backed by a renewed focus on service and cost savings, the Partnership aims to see profits reach £200m in the next two years and £400m by 2025.
The UK’s largest employee-owned business says the business model allows it to invest with a longer term perspective than a conventional business, even in challenging times and amidst a very uncertain economic outlook.
“With this in mind, our five-year plan is self-funding and takes into account uncertain trading,” it said.
“The Partnership Plan sees our business continuing to adapt rapidly to changing shopping habits, getting closer to customers online and in-store. We’ll also expand in new areas where we believe our values can be a force for good.”
It will be bringing partners and products into customers’ homes through a tap on an app. This means investing in more virtual services like personal styling , home design and the John Lewis Virtual Christmas shop .
Delivery capacity will be expanded beyond 250,000 orders per week, up from 55,000 before the pandemic and it plans more partnerships like the trial with Deliveroo.
The biggest shift in focus is in what are described as “Inspirational new services”.
It said: “We’re a Partnership for positive change, improving lives and building a more sustainable future. We’ll grow in areas where these are important to our customers, like rental, recycling, savings, insurance and private rented and social housing,”
It is bringing forward its ambition to be net zero carbon by 15 years to 2035 and is committed to halve food waste in its own operations by 2030, a move being extended to the supply chain. It is aiming to help halve customers’ household food waste by 2030.
All product categories will have a ‘buy back’ or ‘take back’ solution by 2025; all key raw materials in own-brand products will be from sustainable or recycled sources by 2025; and the firm will develop sustainable rental and resale options for customers.
There is a pledge to recruit people coming out of the care system to help them forge a career in the Partnership.
All profits are either invested back in the business or shared with partners as co-owners of the business.
Sharon White: ‘we have responded with great agility
“Today, we are committing that when we expect to reach over £200m profit, we will pay partners the voluntary Real Living Wage. We also aim to pay a bonus when profits exceed £150m and our debt ratio falls below four times.”
Delivery capacity for Waitrose online has hit over 190,000 weekly slots in six months. John Lewis is now a 60% online retailer, and has successfully adapted to offer many in-store services online.
The company is committing £1bn over five years to accelerate its online business and transform the shops. This will be achieved partly by £300m per year cost savings by 2022.
Investing in data analytics and loyalty plans is part of a new value pledge, which will be announced next year. The historic pledge to be “Never Knowingly Undersold” remains in place until then.
Financial services the Partnership credit card is the UK’s biggest retail credit card. There is £100m over five years to quadruple this business, offering new products and services like savings and insurance. It has agreed a new partnership with four providers to create a home insurance product for customers. Customers will also be able to apply for retail credit across all our channels through a deal with BNP Paribas from early 2021.
Housing the firm has identified 20 sites it owns that could be used to benefit local communities by providing affordable housing and a stable income for the Partnership.
Planning applications for two of these will be submitted in the new year in greater London. Entering the ‘build to rent’ market also allows the firm to furnish properties using John Lewis Home products and deliver Waitrose food.
“We’re a landlord already at three of our properties so this is an obvious extension for us. And we’re now talking to developers and investors who can help us achieve our ambitions.”
Outdoor Living. The company is joining up a number of product lines, including horticulture in Waitrose, garden furniture in John Lewis and the plant nursery, garden design and landscaping services at Longstock Park on the Waitrose Farm. It is considering new partnerships and possible acquisitions.
Rental/Resale/Recycle. It says this a growing priority for customers and it has set targets on being more sustainable.
Sharon White, chairman of the John Lewis Partnership , said: “We’ve seen five years of change in the past five months and Waitrose and John Lewis have responded with great agility. Our plan means the John Lewis Partnership will thrive for the next century, as it has the last.”
Nina Bhatia, executive director of strategy & commercial development at the John Lewis Partnership , said: “This is a bold plan to grow our business and get us much closer to our customers.
“We’re creating new inspirational services for customers where strong ethical values and peace of mind matter, like reusing and recycling products, personal savings and rented housing. Our plans will firmly establish Waitrose and John Lewis as the go-to brands for customers that care about quality, value, and sustainability.”