Talking to Fiona Ellis-Chadwick, Andy Street discusses the future of retail:
- How do you see the John Lewis Partnership changing over the next decade?
- What does this change mean for the high street?
- Do you envisage there being smaller versions of the John Lewis stores?
- Is the internet an opportunity or a threat to the department store business?
- What is the impact of the power of online marketing and social media on high street retailers?
Andy Street and Fiona Ellis-Chadwick were talking after a recording of The Bottom Line.
Andy Street: My name’s Andy Street and I’m Managing Director of John Lewis, obviously John Lewis department stores and our internet business.
Interviewer: Hello. The high street is changing, it’s adapting to major forces like economic social technology, how do you see the John Lewis Partnership changing over the next decade?
Andy Street: Well we are at a time of what I think the textbooks would call discontinuous change, and that’s an exciting time for any established business. So what’s John Lewis doing about that? It’s embracing that change. Very clearly those who try to hold back and prevent the change won’t be here. So for us that means the right store portfolio and that totally integrated with our online business.
Interviewer: And what does that actually mean to the high street?
Andy Street: Yeah, what it means to the high street or to the customer? Well just let’s deal with the customer first of all. To the customer it’s got to be that you can shop either by going into the shop, going online, using your mobile phone, ringing up a call centre and whichever way you do it you get exactly the same access to the same John Lewis product and the service and services that go with it. So we say we have to be completely agnostic about which channel people are shopping through.
What that then means to the shops themselves is they’ve still got to have the edited choice of product. We’re not going to have millions of things, we’ve got to have what we and our buyers say are best. We’ve got to have really well trained selling partners who can explain what’s right for you as an individual customer and we’ve got to make it really simple to transact in whichever way you want.
Interviewer: Do you envisage at any time there being perhaps a smaller version of the store?
Andy Street: Yeah, we’ve already gone for a couple of new formats in the last four years. So we’ve got our main full line department stores, big regional centres, like centre of London, centre of Birmingham, centre of Newcastle, and what we are also having is smaller shops, we’re calling them At Home. They tend to be out of town and that brings the best of the home and electrical assortments, but all of the convenience of supporting the online business as well, so definitely that. And then what we are also beginning to look at is just pick up points, which we’re doing through a partner organisation, we’ve just announced with CollectPlus, and so there’ll be about 5,000 locations around the country where you’ll be able to pick up John Lewis goods. So certainly the change in the way people shop has changed our approach to format.
Interviewer: Technology particularly is a strong force that’s been affecting these changes. In the early days we saw specialised ranges, say books, CDs being the things that were delivering success. Do you see operating a department store with a variety of ranges is the internet an opportunity or a threat?
Andy Street: It’s a huge opportunity for those that embrace it. For those who try to resist it, it will become a threat. So let’s be clear, some things are going online much faster than others, you mention books and CDs, but if you look at sort of electrical products now there are about 50 for John Lewis online, for some things it’s slower, but the trend overall is absolutely clear. And what we’ve got to do is say given that trend is happening we’ve got to basically re-engineer our business model to make sure our customers still get the service that they want but at a price we can afford so that we get the right return, and that’s exactly what we’re involved in.
Interviewer: Can you give me any other examples of specific opportunities?
Andy Street: Yeah. One of the great opportunities is this whole issue of click and collect. So people say the high street will be killed by online, not true. People actually tend to be working in city centres or an out of town centre’s an easy place for them to drive to, so what we’re seeing is the fastest growing method of fulfilling an order is by popping into a shop to pick it up, and so that drives footfall back in. So it’s a great virtuous circle actually.
Interviewer: And then how about online marketing? We know about the power of online marketing for online retailers, but what about the power of online marketing for high street retailers?
Andy Street: Yeah. Well it’s a huge growing capability area, and a few years ago we had very small number of people who knew anything about it; it’s now fundamental to our business success. And the most obvious things are the tactics used to get the pay per clicks through, the deals that are struck with Google, the banner site stuff, all of that, but I think, you know, retailers like us are pretty well on there. I think the really interesting thing now is how a brand that stands for lots of things, it stands for service, it stands for responsibility, how the brand gets that message across online as well actually, so that’s the sort of growth in interest area.
Interviewer: And how about social media?
Andy Street: Oh no, that’s the sort of least clear area, and I don’t think anyone would say they’d yet perfected it, but I think most retailers would say they’re absolutely clear they’ve got to be in on that game, and we certainly are. So if you look at our adverts they’re launched on a social media campaign now. They’re all seen on YouTube. You look at our customer comments, they’re all there in the social media, so yeah, the brand is being formed in social media and we’re wanting to interact. You can’t direct it, that’s a mug’s game, but at least be part of that conversation.
Interviewer: So we can be expecting Tweets from you daily in the future.
Andy Street: Not from me, but from John Lewis. People on the brand, you don’t want me certainly.
Interviewer: Thank you very much.
Andy Street: My pleasure.
Interviewer: That’s really fascinating.