The bosses of department store retailer, John Lewis, are deciding which of their 50 department stores may never reopen again after reporting that it is ‘highly unlikely’ they will all survive the lockdown. 400 of the groups staff were already made redundant following the UK lockdown on March 23, with a further 14,000 put on furlough. Sales were down 23 per cent on last year when results were announced in January.
New Chairman, Dame Sharon White, said it could take five years for the company to recover. Alongside the rest of her team, Dame Sharon will meet with City analysts on April 29 to determine the future of the stores.
The group currently owns 35 full department stores and 15 smaller John Lewis At Home shops, but rising rents and business rates have proved as challenging for the bellwether high street giant as many other retail businesses around the UK.
There has been speculation that they will need to tap customers and financial institutions, through a corporate bond, for extra cash. A previous bond was launched in 2011 with a 4.5 per cent interest rate and 2 per cent in store vouchers.
Throughout the lockdown John Lewis has been running “virtual services and experiences” to take some of its in-store propositions into people’s homes via the inernet. The experiences, which include a virtual nursery, tips on home design and personal styling, have provided one-to-one “advice, inspiration and support” for users. The bellwether retailer has also been analysing consumer trends, finding (unsurprisingly!) that online shopping is peaking and Brits have turned to at-home cocktail happy hours to help them get through the closure of pubs, bars and restaurants.
The Waitrose arm of the John Lewis Partnership has fared better than its sister company throughout the lockdown, as shoppers stock up on food and other essentials, spending billions more than usual. However, several Waitrose stores were already forced to close in recent years.
John Lewis Partnership said: “We keep our estate under continuous review in order to ensure we have the right amounts of shops to best serve our customers and remain commercially viable. It is too early to make a decision but, as always, any decision that is made is done with securing the long-term financial sustainability of the Partnership and is always communicated to our Partners first.”
Earlier this year, the company gave a £939,773 pay off to former MD, Paula Nickolds and £892,362 to former Waitrose boss, Rob Collins, despite staff job losses and sales tumbling by a third.
Dame Sharon said in her statement: “We need to reverse our profit decline and return to growth so that we can invest more in our customers and in our partners. This will require a transformation in how we operate as a partnership. These are the most challenging but exciting times in retail for a generation.’
The chain could begin reopening some stores as soon as mid-May, although larger stores, such as those in London, Birmingham and Glasgow, are likely to remain closed for longer.
Retail analyst, Richard Hyman, commented: “No one wants to see people losing their jobs which is what would happen, but the reality is for the market at large, online has been getting bigger and bigger, with John Lewis at the vanguard”. 30 per cent of all retail is already online and for John Lewis that number was short of 50 per cent before COVID-19. It is now at 100 per cent.
“The reality is the retail world we are all moving into means every retailer needs fewer stores than it did before, including John Lewis, and not addressing this problem puts the rest of the business in jeopardy”.
