John Lewis to address “changing customer expectations” following financial results

Opening of the John Lewis store at Birmingham's Grand Central.

The pressure on retailers to stay ahead of the customer curve was reaffirmed this morning after John Lewis revealed it is redesigning its shops to offer additional services and in-store experiences.

The department store retailer, which stocks a range of jewellery and watches, said it faced the challenge of ensuring its business remains in line with “changing customer expectations”, while delivering convenience and added flexibility through its online channels.

The company’s financial results, published today, provide a fascinating insight into the way that consumers are now purchasing items such as jewellery.

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67% of its sales last year came from in-store purchases, with 33% online, but while internet revenues grew a healthy 17% versus the previous 12 months, shop sales actually declined 1%.

However, rather than sounding the death knell for bricks-and-mortar, closer analysis of the results reveals the importance of stores to the overall omni-channel model.

More than three-quarters of John Lewis customers made a purchase from one of its shops, while online sales actually increase in catchments where it opens a new shop.

Click & collect orders grew by 11% and account for 53% of online orders, while sales through mobile devices increased by 34% and smartphones by 86%.

“Our shops are increasingly becoming places of inspiration and leisure destinations,” the company stated. “In Birmingham we opened our first full-line department store for four years with brand new concepts including our fashion-led lifestyle concept loved&found and the first ever &Beauty spa.”

John Lewis is also investing a significant sum in strengthening its distribution infrastructure. A new distribution centre is due to open at Magna Park in Milton Keynes later this year, which for the first time will allow the company to combine online orders from across its product assortment into one site. This development means that customers will receive fewer separate parcels when they order online.

John Lewis sales increased 3% to £4.56 billion last year, while operating profit came in at £250m, around the same level as the year before.

 

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