Waitrose and John Lewis: 5 key aspects of the new strategy

The expansion of digital, virtual and delivery services form a key part of the new John Lewis Partnership five-year plan, led by new chairperson Sharon White.

Grocer Waitrose and department store chain John Lewis, which comprise the partnership, will make several significant changes to their operations as the group looks to stem falling profitability and target a £400 million annual profit in five years’ time.

Its last full-year financial results showed profit before staff bonus, tax and exceptional items was down to £123 million in the 12 months to 30 January. In September, it posted a £580 million loss for the first half of the current financial year – driven by the impact of the coronavirus pandemic, widespread structural change, store closures, and a downturn in business.

Essential Retail picks out five key points from the turnaround strategy:

Digital and delivery

The partnership has committed to investing more in digital services. During the pandemic it launched a series of virtual classes and consultations across Waitrose and John Lewis – and it will do more of this, illustrated by the recent launch of the John Lewis Virtual Christmas shop, which is powered by 3D tech platform Matterport.

Waitrose’s online delivery capacity is set to grow to 250,000 orders per week, up from 55,000 pre Covid-19. A quarter of delivery slots will be kept for vulnerable people, and more partnerships – like its tie-up with delivery app Deliveroo – have been promised.

CX commitment

The partnership acknowledged “it’s not always been as easy as it should be to shop with us”, so it is investing £1 billion over the next five years to accelerate the capabilities of its online business and to transform the shops it is not closing. This investment covers improvements to the websites, apps, and general customer service operations.

Proper partners

Waitrose and John Lewis will become more closely aligned, according to the new strategy. Already, for example, the Waitrose Christmas hampers are available through John Lewis, which in turn will sell Christmas trees in 300 Waitrose stores, supported by shoppable QR codes.

The two retailers are already putting plans in place to link their loyalty schemes, and John Lewis click & collect is available at Waitrose stores. The partnership has promised more expansion of click & collect to bring John Lewis to additional communities.

Rental and recycling

A partnership with online furniture rental business Fat Llama will be extended, giving John Lewis customers more chances to rent rather than buy items. Indeed, playing a part in the so-called circular economy is a focus for the partnership, which has committed to all products having a ‘buy back’ or ‘take back’ solution by 2025.

Channel changes

Identifying new channel opportunities, the partnership is set to invest further in housing. It said it has identified 20 sites it owns that could provide affordable rented housing rather than pure retail, and it aims to enter the property market while furnishing these sites with John Lewis products and establishing Waitrose food link-ups.

The general plan is to be more environmentally-friendly and ethical, with a concerted focus on employing people from the care system and investing profit back in its staff. The partnership is thinking differently about its proposition in several ways, underpinned by a significant digital shift that it expects will John Lewis become a 60-70% online retailer by 2025.

More localised product ranges are expected to be developed, and the Never Knowingly Undersold price promise will be changed in the months ahead, as part of a continued evolution of pricing strategy in general.