The John Lewis Partnership has been one of the enduring retail success stories of the past twenty years or so. Until recently it was right up there as one of the most profitable retailers. Recently, mainly due to the shift from bricks and mortar, the increases in business rates and the general struggles of Department stores, it has encountered a rocky patch. This is likely to be reflected in a profit warning in his interim results to be presented in mid-September 2018.
Coincidently it has also undergone it first major brand-refresh in seventeen years. This attracted my attention as it can provide some interesting learning points for us as we study retailing in general and branding in particular.
What does “re-brand” entail? How is it likely to potential impact on the future direction of the business? Let’s examine these issues in greater detail.
The John Lewis Partnership involves two “strings to its bow. The John Lewis Department stores and the Waitrose chain of supermarkets. The main points of differentiation across the two operations have focused on its “partnership” model and an emphasis on customer service and quality products.
In the case of the partnership model the emphasis is placed squarely on the role played by its employees – referred to in all cases as partners. It is also reflected in the way in which they are remunerated: each year a proportion of the profits are shared out by way of bonuses across the partners. This approach has often been highlighted by business consultants in general and Human Resource specialists as an innovative mechanism for motivating and rewarding loyal staff. Problems may arise however when the level of profitability slows and there is no mechanism for paying bonuses.
The John Lewis Partnership is re-branding itself by inserting the “& partners” alongside its logos – resulting in John Lewis & partners and Waitrose & partners.
Cynics might suggest that this is a cynical attempt to seize upon its traditional emphasis on its partners, at a time when its ability to pay bonuses is restricted due to a decrease in profitability. An even more cynical view would be that management is using this approach to demand more from its partners in an environment where the National Living Wage has been increased and where it has cut its staff to allow for the wage increases that are necessary to meet the new demands placed on them by the government.
Critics of “branding gurus” also might argue that simply adding a couple of “vacuous words” to the logo and fascia is unlikely to have any real impact on revolutionising its retail strategy.
The counter-argument revolves around the need for retailer brands such as John Lewis and Waitrose to focus on its key points of differentiation, particularly in a sector which has and continues to undergo major changes in customer behaviour and technology.
An acid test for adjudicating on the appropriateness of a re-brand is the amount of money the company is allocating to the proposed changes.
The John Lewis Partnership plans to spend upwards of £500 million over the next three years on product and service innovations. In particular it will address the need to come up with unique products, more personalised service to its customers and expanding its range of own-labels from thirty to fifty per cent of overall revenue across the two businesses. It also plans to sign agreements (in the case of John Lewis & partners) with a range of relevant international brands to further reinforce its reputation for selling quality products.
In order to address the re-focused pre-eminence of its partners, it envisages a major overall in terms of how to enhance the quality of the shopper experience. For instance all partners will be equipped with iPads and an app which will allow them to send suggestions via email and SMS to customers. They will also engage more proactively via social media platforms with comments and suggestions that reflect the personal preferences and perceptions of shoppers.
In the case of John Lewis & partners their roles will also change. In the case of relatively complex items such as beds, computers and nursery products, partners will in effect become product coaches and advisors. This focus on expert advice is seen as a critical dimension in terms of enhancing the quality of the customer experience.
If we move to Waitrose & partners we will see greater focus on enhancing the roles of partners. They will present themselves as wine and cheese experts, fruit & vegetable facilitators, healthy eating specialists and coffee baristas. This, management argues, will not be just a genuflection to the concept of retail as theatre: partners will be provided with the necessary training to allow them to perform as proper experts, as opposed to playing at being gurus!
The essence of brand equity in my view revolves around the basic principles of trust and confidence on the part of customers and the extent to which this is reflected in their ongoing loyalty and commitment.
We must remember that in both cases (John Lewis and Waitrose) it has long held a strong reputation for service and product quality. This has allowed it to de develop a strong level of brand equity. By achieving this status it also means that loyal customers are willing to pay a premium for items purchased in both dimensions of the overall business This means in theory that they are less resistant to the vagaries of recessionary periods.
In many ways the new strategy proposed is a reinforcement of its existing brand essence.
The partnership also plans to work more closely with its suppliers in general and its farmers in particular. They are seeking improvements in quality while at the same time being conscious of the necessary changes they need to make in order to address more general environmental concerns.
For instance by the end of 2018 they plan to stop using black packaging for meat, fruit & veg and fish products. By 2019 they have set a target of eliminating such packaging totally.
It explains away the impending profit warnings by arguing that major investments in logistics and IT have placed some strain on its resources and that there will be long-term benefits accruing from such initiatives.
It remains to be seen if they can achieve its improvements by focusing on the “people” factor. We are not privy to internal marketing research which they may have conducted. The re-brand” appears to be predicated on the belief that its core shoppers will respond in a very positive fashion to the enhancements in the customer shopping experience that are expected to flow from the initiatives.
Likewise the two businesses will also be expected to drive such enhancements across its online channels.
Is this a minor tweaking of existing core differentiators? Or is it the precursor to a major rejuvenation of the two brands? It is too early to make a coherent observation at this stage. Brands, like humans, need an occasional “freshening up”. Given that it is seventeen years since the last “re-brand” it may be the right time to make such changes. Let’s see what happens over the next year or two.