John Lewis Partnership chair Dame Sharon White admits that the business needs to over-achieve over Christmas if it is to pay out a bonus next March. Can it do it?
By guest author Gemma Goldfingle from Retail Gazette – September 16, 2022
John Lewis Partnership revealed it would pay all staff a one-off cost-of-living support payment as part of a GBP 45 million investment into helping its partners out during these straitened times.
As much as such a move should be applauded, the cynics among us have suggested that the payment may be in lieu of a bonus this year as the group also unveiled a GBP 99 million loss for its first half.
Dame Sharon White didn’t shy away from this. “We will need a substantial strengthening of performance, beyond what we usually achieve in the second half, to generate sufficient profit to share a Partnership Bonus with Partners,” she admits.
But can John Lewis Partnership deliver a Christmas good enough to give partners a much-needed present come March?
A memorable and affordable Christmas
White insists it has “some very, very strong foundations” going into peak and says that “both brands are really set up for a memorable and an affordable Christmas this year”.
It is helped by some macro factors. For one, White thinks that new prime minister Liz Truss’ energy price cap, which should freeze bills at an average of GBP 2500 for two years, could have a “game-changing” effect on consumer sentiment.
“The biggest drag on consumer sentiment ahead of the government’s intervention on energy prices has been energy bills. A two year freeze and the cap, I would expect to have quite a profound impact,” says White.
However, White is under no illusion that the customer will still be finding life hard and says it will “lean into value in an even more significant way”.
“We will be really focused on affordability without letting go of the quality and service that customers expect from the brands,” she says.
There are other reasons to be positive about Christmas. White also points out that this year looks set to be the first “uninterrupted” Christmas since 2019 as Covid appears to be easing off.
That also means that the supply chain disruption that Covid stimulated has also eased. John Lewis boss Pippa Wicks points out that in the run up to last Christmas China and Vietnam effectively closed down due to the virus, which led to stock shortages across retail.
However, this year John Lewis is prepared. Wicks says it has 15 % more Black Friday stock and 12 % more Christmas stock and that 85 % of the products it aims to sell are already in the country.
Another potential filip is the timing of the World Cup, which falls between November 21 and December 18, which could lead to a jump in people snapping up new TVs as well as booze and food for those getting people over to watch big matches.
Waitrose boss James Bailey says: “A World Cup and Christmas tend to be two of the biggest events for a grocer in any given year so putting them right next to each other is unprecedented.”
Ultimately, Wicks thinks it will be a good golden quarter for John Lewis and she has vowed to “take on the Christmas emporiums” to make sure the department store is the place to visit this Christmas.
“People will be looking to have a thoughtful, family-orientated Christmas, which we’re excited about from a trading point of view.”