Yahoo Finance Bad weather and Brexit cloud big-ticket buys at John Lewis
The recent downturn on the high street is largely down to the weather but the uncertainty of Brexit continues to dampen demand for big household purchases, according to the boss of John Lewis.
“October is going to look pretty grim for the market,” said Paula Nickolds, managing director of the department store, ahead of the opening of the company’s first new store in a year, in Oxford.
But Nickolds said the poor month was down in comparison to a very strong trading period last year, when shoppers finally took to the high street to buy their winter woolies after a very warm September. This year October has been warmer while September was better for many retailers. Nickolds explained that looking at the last three months together, trading was similar to last year.
“It is not a contraction of the market it is more about the vagaries of the weather. It would be dangerous to read too much into the October numbers,” she said.
The retailer still expects this year’s Black Friday discounting event on 24 November to be its busiest trading day of the year.
Nickolds said John Lewis was trading ahead of the market as a whole and sales had picked up in comparison to the company’s first half which ended in July.
However, home furnishings and more expensive purchases were “really challenged” as housing sales remain low.
“In my years in retail I have never seen such a pace of change or level of transformation and disruption we are experiencing at the moment. What is happening in retail predates Brexit, it’s about the changing nature of customer behaviour and changes to fixed costs. It’s true to say that its been exacerbated by the uncertainty of Brexit and what that has done to consumer confidence,” she said.
She said John Lewis had to up its game by tempting shoppers back to the high street with the kind of experiences they could not find online.
While some shoppers would be focusing on cheap prices, Nickolds said there was also likely to be a “flight to quality” as others sought out fewer but longer lasting buys.
Nickolds said John Lewis needed to hold to its “north star” of good customer care and quality while introducing more services.
The £18m Oxford store is home to the retailer’s first “brand experience manager” to help navigate 21 services on offer, including the chain’s first personal shopper for men, technology workshops and a pop in nail and eyebrow bar.
A fifth of the 120,000 sq ft Oxford store’s floorspace is dedicated to such services as well as events spaces, where John Lewis expects to host yoga classes, storytelling for kids and fashion events, as well as two restaurants and a coffee bar.
The retailer, which now sells 40% of its goods online, has slowed new store openings to a trickle. It has confirmed plans for just two more outlets – Westfield in west London and in Cheltenham, both due next year.
John Lewis’s parent company’s half year profits slumped by more than 50% amid rising costs, particularly at its Waitrose chain, and weaker consumer demand prompted by Brexit.
