As Dame Sharon White prepares to leave John Lewis Partnership, she can’t exactly say ‘job well done’. It’s more like ‘job half done’, with no real promise that the end goal will ever be reached.
In fact, only a month ago, the JLP chair revealed that her big five-year plan that she promised would deliver £400m a year in profits at the department store and grocery group, would be delayed by two years.
Meanwhile, the losses continue to rack up. At JLP’s recent half years, she had managed to narrow losses by a measly 14%, meaning that the group was in the red to the tune of almost £60m.
If the aim is £400m in profit, that seems a long way off.
Slow progress of a much-criticised plan
Of course, White has had a difficult run since she was hired as chair of John Lewis back in 2019, with a global pandemic and a cost-of-living crisis to contend with.
But she’s also had some things go in her favour too. The demise of rival Debenhams, which operated close to 170 stores across the UK, should have given John Lewis an open goal.
The collapsed department store turned over more than £2bn in sales. John Lewis should have hoovered up some of this, but very little of that custom appears to have gone its way.
Instead, M&S and Next, both of which have adopted more of a department store offer of late, adding beauty and more third parties to their mix, seem to be making gains.
Retail expert Jonathan De Mello, CEO of JDM Retail, says her departure comes as no surprise. “Under her stewardship JLP has been mostly loss making, and though the business has had to contend with both Covid and the cost-of-living crisis in that time, peers such as M&S have not experienced the same level of decline.”
Although White was unafraid to make some tough calls, such as closing 16 stores back in 2021, and has had some successes, such as the launch of John Lewis value range Anyday, her grand plan seemed confused and the lack of retail knowledge at the top was glaringly obvious.
The fact that White, a civil servant by trade that had previously led Ofcom, had no retail experience in one of the toughest markets the industry has ever seen has hurt the business.
And when senior retailers in her team – people like John Lewis boss Paula Nickolds and ex-Waitrose boss Rob Collins who held decades of experience at the business – quit not long after her arrival, she was left with a gaping knowledge vacuum at the top.
It’s notable that many of the big issues that JLP has been hit with in recent years, be it a lack of availability in Waitrose or making sure its products are competitive in terms of price across both retail brands, are very-much retail problems.
Her grand plan has faced much criticism, particularly its move outside of retail, such as its foray into housing.
In fact, White expects that 40% of JLP profits will come from non-retail activities over the next decade.
However, the financial viability of these schemes has been questioned after it emerged that one of the three housing schemes the business has in the works, the construction of more than 400 flats above a Waitrose store in West Ealing, could cost the company far more than its worth on paper.
Planning documents have revealed the development could result in a negative return of £57m.
De Mello says: “Much of the issues JLP face are of their own making – lack of direction at Waitrose, changes mooted to their unique partnership model, and an aspiration to become a property developer to name a few – and ultimately Dame Sharon is responsible for these.”
As De Mello says, the mere suggestion of changing the employee-owned structure of the partnership was a big strategic misstep.
The move, which has since been shelved, might have been well-intentioned, with the aim of raising more cash to invest in its transformation, however, to dilute the partnership showed a lack of understanding of what made John Lewis special, to customers and staff alike.
The move received widespread condemnation.
Former John Lewis boss and now Mayor of West Midlands Andy Street said abandoning the partnership model would be a tragedy for the business while Mary Portas said the retailer had “let go of its soul”.
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
GlobalData Retail managing director Neil Saunders terms the move “ill advised” and says it hurt the morale of partners.
That is a big problem. JLP’s partners are the lifeblood of the organisation and the reason so many shoppers visit its stores.
They understand that they may pay slightly more at its brands but the service and advice they get is second to none.
After years of redundancies, no annual bonuses and the suggestion of diluting the partnership, JLP staff are demoralised and certainly not geed up to undergo a wide-sweeping transformation.
The fact that White narrowly survived a crunch vote earlier this year when the partnership council, made up of more than 60 partners, said it did not have confidence in the business’ performance under her leadership – although they did back her future strategy – speaks volumes.
What next for John Lewis Partnership?
White leaves a battered and bruised John Lewis Partnership, which despite many changes – notably the thousands of jobs axed – is no better off from a financial point of view than when she joined and appears somewhat rudderless.
The fact that White intends to stay on until February 2025 suggests she will continue pursuing her turnaround plan – though the two-year delay revealed earlier this year means she personally may not see it through.
However, De Mello believes the business should call time on her plan.
“One can only hope that whoever replaces her focuses on getting back to basics, with good retailing once again at the core of everything JLP does and stands for.
“The business very much can turn things around, which – sadly for Dame Sharon – will mean scrapping a number of the ideas she and her team have been trying to enact over the past few years.”
One thing is for sure, action is needed for John Lewis to course correct – and recapture what makes it special.
Click here to sign up to Retail Gazette‘s free daily email newsletter
