December 7 2013 Latest news:
Ben Woods, Business writer
Friday, August 30, 2013
The boss of department store John Lewis has visited Norwich to check up on the progress of its refurbishment in the city. He also caught up with business writer Ben Woods
It has been a year since the managing director of John Lewis Andy Street discussed the future of its Norwich department store.
Back then, he was hailing a significant £7m refurbishment that would revamp its beauty department, transform its menswear floor and create a new customer collection point.
And as he returns to the city as the project nears it completion, he admits that he is satisfied with the results.
The department store shop sales in Norwich are up 4.7pc on last year – a standout performance compared to other stores in the country.
But while it maybe at the tail end of its transformation, it is not resting on its laurels.
It has set its sights on bringing in new fashion ranges to bolster its retail offering including clothing brand Whitestuff, Diesel Jeans in menswear and Alice Temperley in womenswear.
For Mr Street, its is about preventing the store from becoming “pickled in aspic” and giving greater freedom for its head of branch – Isabel Macdonald – to meet the demands of its regional customers.
And the firm has proved that it is not shy of moving into previously uncharted territory either.
Retailers are adding jobs at the fastest rate since May 2002 as a feel-good factor continues to boost sales in the sector, a CBI survey revealed.
The business lobby group said sales surged at their strongest pace since November, with clothing, food and recreational goods in demand.
And for the first time since January 2011 sales volumes were above average for the time of year, fuelling expectations for more robust growth in September and meaning retailers are likely to take on more staff.
The CBI added that optimism over firms’ overall business situation in coming months was also at its highest for three years.
The strong retail data adds to evidence that Britain’s fledgling recovery is gathering pace, and follows last week’s official upgrade to growth in the April to June quarter, from 0.6% to 0.7%.
The mood on the high street has been helped by warmer weather, British sporting success in tennis and cricket and the birth of the Duke and Duchess of Cambridge’s son, Prince George, in late July.
Barry Williams, Asda chief merchandising officer for food and chairman of the CBI survey, said: “A rise in spending is welcome news, but the bottom line is that confidence will not bounce back fully until family finances improve further.”
In 2010 that it would be launching an insurance business based on the brand’s hallmark of “trust”.
This was followed up with a statement of intent at the beginning of this month when it rolled out a £5m advertisement campaign to push itself forward as a serious competitor in the market.
“The whole insurance side of the business has yet to reach its full potential yet,” he said. “Since we kicked it off, we have secured quarter of a million customers, made it profitable, and have scored very highly on customer satisfaction.”
According to Mr Street, John Lewis wants to gain market share by capitalising on where other insurance firms have made mistakes.
But what about retail? Can we expect a similar cash-injection into an ad campaign for its department stores? It may prove timely given the attention given Marks & Spencer’s recent celebrity-driven campaign to help shore up sales of its fashion range.
But this type of headline-grabbing move is not likely to happen on Mr Street’s watch.
“The M&S advert is all about celebrities,” he said. “And we have only one celebrity in our campaigns – and that is John Lewis itself.”
And he is not wrong. The uccess of its Christmas 2012 advertising drive – featuring a love-struck snowman looking for gifts– sparked a 44.3% in online sales in its ‘click and collect’ service, where customers order a product online and collect it in store.
And there is evidence that this service has proved just as popular in Norwich with the store seeing a 11% increase in online sales for the catchment compared to last year.
But while some may speculate that rising online sales is a sign of customers shirking the high street, Mr Street disagrees. He is confident that the brick and mortar shop has a bright future, with room for both “brick and click” when it comes to meeting a customer’s needs.
And as far as retailers go, John Lewis – and its supermarket partner Waitrose – has an enviable reputation for customer service.
Back in April this year, the department store emerged top of a survey of 5,900 consumers conducted by retail analyst Verdict, beating Swedish flat-pack furniture specialist Ikea.
But it has not all been easy street in recent weeks.
Mr Street’s whistle stop visit to Norwich store comes in the wake of the firm’s £40m payout after it miscalculated the amount of holiday pay owed to 69,000 staff.
The problem was on course to rectified by the end of August by topping up employee pay packets with the compensation – sums ranging from as little as £100 to as much as a £1,000.
And while he admits the problem had come as a “surprise”, he is quick to point out that its company partners will not bear the brunt of the shortfall.
In fact, plans are being executed to plug the gap from the company reserves.
“It was not expected at the time the budgeting was done,” he said.
“As soon as it was brought to our attention it was dealt with.
“But what has also been made clear is that we have managed to deal with it so it doesn’t impact the bonus this year.”
It is a move that will quickly regain any lost trust in the firm, which prides its self on its honest values. But as Mr Street looks ahead to the firm’s interim results in two weeks, what does the future hold for the department store chain and its Norwich store?
“Norwich is essential to our plans,” he said. “We have invested substantially over the years and we are seeing the returns in the sales here.
“Now we need to make sure that we continue to attract new customers, as well as a younger customer as well. I believe big regional cities like Norwich are a crucial part of our local economy and we are determined to play a long term part.”
Two hundred jobs are set to be created after one of west Norfolk’s largest businesses was granted permission to expand its King’s Lynn facilities.