September 5, 2018 / 1:56 PM / 8 months ago

John Lewis puts faith in partners not drones to weather change

LONDON (Reuters) - John Lewis, Britain’s largest department store business, is confident its 28,000 employee “partners” and an investment drive will enable it to ride out a period of brutal trading.

Branding and signage is seen at the John Lewis and Partners retail store in Oxford Street, London, Britain, September 5, 2018. REUTERS/Toby Melville

Britain’s department stores have been hit by an inflationary squeeze on consumers and sluggish wage growth, rising labour costs, higher business property taxes and online competition as well as a record-breaking summer heatwave.

BHS went bust in 2016, Debenhams DEB.L has warned on profit three times this year and House of Fraser was bought out of administration last month by Mike Ashley’s Sports Direct (SPD.L).

Managing Director Paula Nickolds said on Wednesday the 50-store John Lewis, which is being rebranded to John Lewis & Partners, could be interested in taking on a handful of House of Fraser stores in primary locations if they came onto the market.

The John Lewis Partnership , which as well as the department store business owns the upmarket Waitrose supermarket chain, said in June it would invest in both businesses at a rate of 400-500 million pounds per year, aiming to differentiate them from other retailers through innovation.

The launch of the new identity is being backed by the first joint John Lewis & Partners and Waitrose & Partners national marketing campaign, including new TV and cinema adverts.

And at a media event to showcase a multi-million-pound refurbishment of John Lewis’ flagship store on London’s Oxford Street Nickolds said the 154-year old department store business was “determined to play the long game”.

“I’m not saying retail is easy. We are experiencing an unprecedented level of disruption and change,” Nickolds said.

The Oxford Street store refurbishment includes a brand new womenswear floor, a new shoe hall and new personal styling and beauty services.

“While others are investing in drones we’re investing in our partners, while others are cutting back we’re investing in the very thing that is our point of difference,” Nickolds added.

In June the partnership warned of a big fall in annual profit before exceptional items and said profit would be close to zero in first half results due on Sept. 13.

The outcome for the seasonally less important first half reflected “probably the most promotional period of our history”, as well as major investment in technology and fulfilment, said Nickolds, adding that John Lewis’ key customer metrics and market share all showed “good progress”.

The retailer said on Tuesday its sales increased 1.3 percent year-on-year in the five weeks to Sept. 1.

Reporting by James Davey; Editing by Alexander Smith

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