April 21, 2013 Leave a comment
Here is another article from the Sunday Telegraph today, by Graham Ruddick:
‘Success online? It’s all about shops actually’. John Lewis may have just cleared £lbn, but Mark Lewis, its new online director, only wants to talk about the retailer’s department stores.
“Hugely important, hugely, hugely important,” he says of the stores. “It would be a real mistake to view them as separate businesses. That’s not how we view them internally.” The reason for Lewis’s praise for the John Lewis stores – of which there are 39 in the UK – is the rise of 2.6pc in like-for-like sales at John Lewis department stores multichannel retailing, or “omnichannel” as John Lewis calls it.
“Multichannel” is probably the hottest topic in the retail industry. It is about offering customers a service across different retail formats shops, the internet, and mobile apps. The retailers driving a multichannel strategy believe that the winners in the industry over the next decade will be the companies that can offer customers the most convenient and seamless shopping experiences. To sceptics, multichannel is just a buzz word dreamt up by companies trying to justify their costly presence on the high street. But for John Lewis it is the core of their strategy, and it is working well. Lewis says that two-thirds of all John Lewis sales involve a customer interacting with its stores and website. In addition, one third of all online orders are now collected in John Lewis or Waitrose stores after a doubling in the retailer’s click-and-collect service in the past year. Store managers are not just accountable for sales in their stores, but also internet sales in their catchment area.
“Customers don’t view us as a store or a website,” Lewis explains. “They view us as John Lewis. “If you think about the world we are in now, it is more about customers choosing how they want to shop than retailers telling customers where their stores are. It is a different dynamic, it is being led by the customer. Our job is to follow that and stay ahead of it.” The rise of the internet has inevitably cannibalised some store sales, with the Peter Jones department store in west London understood to have been hit. But in the year to January 26, John Lewis not only recorded a 41pc rise in online sales, but also a 2.6pc increase in like-for-like sales in stores.
These statistics have helped John Lewis become the benchmark for multichannel retailing. “Omnichannel means we are there for the customers for how they want to shop, when they want to shop, in a way that suits them,” Lewis says. “That goes across the whole shopping experience, whether they are researching items, buying items, getting items delivered or collecting them. “This is fundamentally changing how retail has to run. If you look at the evolution, clearly stores have been around for an awful long time, then there were some pure-play online retailers, and then store retailers developed their own websites.
“Now we are at the stage where the website is not a stand-alone thing with a different set of customers. Actually, it is part of the integrated business and we as a business want to fully integrate that and present a very seamless, single presentation to the customer.” Lewis joined John Lewis on March 4 after being lured from his role as chief executive of Collect Plus, which operates a network of lockers in corner shops across the UK for customers to collect online orders. Before that, he was the UK managing director of eBay.
Lewis’s background at Collect Plus hints at the continuing importance that John Lewis places on having a physical presence across the UK and he is adamant that stores will maintain a pivotal role for the retailer. For John Lewis, its stores are a unique weapon in the battle against online-only retailers such as Asos and Amazon, which are now competitors alongside traditional rivals such as Marks & Spencer. For example, when a new John Lewis department store opens, not only does it generate its own in-store sales, it also boosts online sales in the surrounding area. Online sales increased by 30 pe in the Chester area when John Lewis opened a department store there in September 2011. “We have stores that people want to go to,”
Lewis says. “I think it is inevitable that stores will look very different in the future and we are committed to innovate on that. But I wouldn’t want you to go away underestimating how important the partner experience is for shoppers. “The fact customers know they can come to John Lewis and speak to a partner who owns the business, has most likely been with the business for a fair amount of time, who understands our products intimately, and can advise them on their purchases that is still a fundamental part of what makes John Lewis.” Although Lewis is only weeks into his new job, he is already working on further developments to John Lewis’s online operations.
With the multichannel model in place, this is also likely to drive changes within stores, too. Lewis believes that mobile technology and personalisation will become increasingly important, so the revamped John Lewis website has a new “wish list” function for customers. “If we took a little time machine into the 30pc rise in online sales in the Chester area after a store opened future and then look back, I think we would walk through the store today and see customers shopping in very different ways,” he explains. “They are already walking into the store with very sophisticated technology in the form of their smartphones. Increasingly they are using that technology as part of how they shop – be it to scan items, to get extra information about the items, to find reviews, or to pay for items. All those elements are coming our way very, very quickly.”