// John Lewis under fire for charging third-party brands “ridiculous” fees to stock their products
// Brands currently pay John Lewis up to 50% of every sale in commissions and fees
// Lifestyle retailer Seasalt has cut ties with John Lewis saying it would push its offering in Marks & Spencer and Next instead
John Lewis is reportedly facing backlash from third-party brands who have accused the department store chain of claiming “ridiculous” fees to stock their products.
The retailer’s chairwoman Sharon White has enlisted Alix Partners to renegotiate supplier contracts, under which brands pay John Lewis up to 50 per cent of every sale in commissions and fees.
Seasalt has since decided to cut ties with John Lewis saying it would push its offering in Marks & Spencer and Next instead, while two other unnamed brands had negotiated for discounts, The Times reported.
READ MORE: John Lewis hires advisers to help “deepen” supplier relationships
In March the employee-owned parent John Lewis Partnership said it was not planning to reopen eight of its 42 John Lewis shops from lockdown, adding to eight closures last year.
The moves to hike fees comes following a top-level shakeup at the retailer.
In May, there were a host of new senior appointments — including bringing in a “store of the future” director.
John Lewis appointed Stephen Spencer, currently director real estate, store development and strategic sales at athleisure brand Lululemon, as director of store of the future.
This came alongside plans to invest £50 million in johnlewis.com this year as shoppers continue to buy online.
“The review looks at a range of themes such as marketing and shop space, as well as fees. We build trusting and fair relationships that benefit John Lewis and our suppliers,” John Lewis said.
“In the last six months, we’ve introduced 90 new Fashion brands, which demonstrates that we are an attractive partner to our suppliers.”
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5 Comments. Leave new
Rather than ditching unwanted brands, i think JL would prefer to make it too expensive for the unwanted brands to stay whereupon they would leave of their own accord.
This is a classic commercial play from a failing retailer, unrealistic charges will force brands to remove their supply and the retailer slowly declines.
JL does have a last man standing high street department store advantage to exploit.
However, instead of holding on to the peppercorn rents and waiting for market stability – two new non-retail experienced MD and chairpersons calling in the asset stripper consultants to review the business.
Shock horror – they discover the underbelly of the BMD function turns out to be over bloated and inefficient legacy system.
The sad reality for the JL co-ownership model were already made long ago when Co-owners found their levels of influence marginalised in the reformed democratic systems. This now a systemic result of that marginalised/sparse co-ownership power and not have majority share owner pressures directing the business to optimising and evolving over time. Instead the previous board made more poorly executed changes and left when the boat started to sink. Now JL partners are left with externals who aim to hack and slash their way to cost efficiency – leaving both internal and external stakeholders upset – no winners. So much for a last man standing advantage
Over expansion is part of what is killing department stores, diluting the brand, Bad management private equity selling off freeholds and putting huge stores on long expansive leases and selling the company on for billions in the late 1990s and late 2000s. In John Lewis case, they over expanded in physical stores when they should have opened a better home delivery network.
It won’t be the last time JL hit the headlines this summer as they prepare to make mass redundancies in both JL & Waitrose shops. Surprised that hasn’t leaked into the mainstream media yet. When you consider how Waitrose and it’s Partners have propped up the JLP throughout the last 18 months, I imagine this will raise eyebrows, leave a very bad taste and do a great deal of damage to the company’s reputation as an organisation that puts its “Partners” first.