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John Lewis: Retailers will become lifestyle consumer brands

The high street has been on a journey for several years, with the rise of ecommerce contributing to the demise of several popular brick and mortar stores across the country. This ‘demise’ of the high street has been accelerated in the past year as the COVID-19 pandemic caused stores to shut their doors for much of the past 12 months and, as a result, we saw several brands close their doors for good.

The pandemic has meant that the high street has had to adapt to changes it could not have foreseen in such a short period of time but, nonetheless, the entire retail industry has had to do just that, changing the entire structure of their businesses.

“Half of our business – the department store side of our business – became a pure play overnight in lockdown one effectively. And then again later in the year. That has had huge implications not just on the digital front end of the website, but for the fulfilment, logistics, and marketing behind it,” says Andrew Murphy, Group Operations Director at John Lewis Partnership.

“A significant proportion of our marketing is designed to drive footfall into shops – and that, obviously, became pointless.”

Putting digital first

John Lewis’ model has gone from putting equal focus into its physical stores and its website to “one where we’re seeing ourselves as a digital business with some shops,” according to Murphy.

This shift has meant the retailer has had to invest more in its software engineering team and focus more on its digital customer journeys, having previously relied on its in-store experiences to support that side of its business.

“Pre-COVID, we were frequently trying to mirror offline and online experience and trying to give the customer a decent option in either channel, recognising that they would quite often bounce between the channels along the customer journey, from awareness to post-purchase,” explains Murphy.

“What we’re doing now is effectively saying that answer has to be a brilliant end-to-end journey. The store experience has to be the cherry on top for the experiences that need that cherry on top. What people will see is a deeper, richer experience in some areas where that physical interaction with that product and service really makes sense and, equally and opposite, filling out some of the experience that everybody is just used to transacting online.”

The retailer’s Waitrose arm has also seen significant changes over the past year, with less consumers also heading out to the supermarket, despite these continuing to be open.

“On the supermarket side of the business, online has gone from a fairly niche, quite urban city centre, millennial interest to something more mainstream,” says Murphy. “We’ve just re-platformed the Waitrose website – and thank goodness we did, because the old platform wouldn’t have been able to cope with what we’ve had to do. So, that customer experience and that on-site experience is becoming much richer. It’s becoming much less transactional and becoming more magazine-type content and a more immersive experience.”

Virtually the same

As we begin to move out of the pandemic, Murphy doesn’t expect the John Lewis in-store offering to go back to the way it was before, as the shift to a more digital model was always inevitable – it just came a little quicker than expected.

As such, John Lewis will continue to offer virtual services to its customers.

“One of the areas which we’re leading is virtual services. The reason we’re able to do that is because the service itself is something we already have the capability to deliver. We’ve got the human capability and the infrastructure capability,” says Murphy.

“The pandemic is one of these odd moments where necessity makes you test something that previously you’d have thought, ‘I’m just not sure anyone will want to do this’. But then we had to suddenly realise that people will sit there and watch you show them the cot or the baby walker or listening to an educational discussion about the different types of feeding equipment.

“Virtual services don’t cost us a lot to deliver,” Murphy continues. “One of the economically compelling things about digital is once you’ve established the basic infrastructure, every additional thing you add on it has a very small marginal cost and it doesn’t take long to do. Whereas, in the physical environment, everything is expensive to do for the first time. And you’ve got to do it in multiple locations as well. The economics of switching to digital are really compelling. If you think the proposition is credible and the customer will go for it, it’s a no brainer.”

Retail still has more to offer

With the digital shift, there are several other issues that retailers have to contend with and one of those is ensuring that they are delivering a great, personalised online experience for their customers.

Murphy acknowledges that John Lewis isn’t quite where it would like to be in terms of offering a truly personalised online experience, stating that the retailer is “probably 12 to 18 months away” from where it wants to be in relation to curating its datasets and operationalising them.

Once John Lewis – and other retailers – is able to do this, Murphy expects that the gap between the likes of Amazon and ‘traditional’ retailers will begin to narrow.

“Particularly in retail, as time goes on, the digital experience in that narrow sense of the frontend website will be much less of a differentiator,” says Murphy. “All of the differentiation will come in the context of the ecosystem within which that plays. Amazon has barely changed its frontend in 15 years, but Prime and the associated parts of the ecosystem change every few months. That’s how we’re thinking about our business as well. Every customer touchpoint, every line of business has to play a role for us in the overall consumer ecosystem.”

Part of John Lewis’ plans to deliver more for customers could also include the launch of products within other sectors, such as financial services and property.

“Rather than seeing ourselves as a retailer that sells food through Waitrose and non-food through John Lewis, we see ourselves as a consumer brand, the John Lewis Partnership,” explains Murphy. “We can see enough similarity in our core customer types that we think, ‘you know what? We can do a lot more things for these people’. And we need to start being customer-led, rather than product-led or category-led.

“In the next 10 years, my prediction is that the big UK retail brands will all be played out as lifestyle consumer brands that do multiple things and use retail as the big scoop to get the biggest number of customers into the brand in the first place, and then begin to try to create loyalty and acquire their custom in other areas,” Murphy concludes.

Andrew Murphy recently discussed ‘Retail’s Big Digital Catch Up’ at Nimbus Ninety’s Chief Disruptor Live event

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