John Lewis: How a 150 year-old retailer became an omnichannel championby
John Lewis has long been synonymous with excellent customer service and satisfaction. Since it first opened its doors in 1864, satisfaction has been the key tenet of the retailer's strategy, introducing a slogan in 1926 reflecting this - "Never knowingly undersold"- that it still uses to this day.
Indeed, satisfaction is part of the very fibre of the organisation, thanks to the store's employee ownership scheme, whereby employees – or partners, as they are called – become beneficiaries of a trust that shares profit and are involved in key management decisions through democratic bodies. The scheme, the largest in the UK, ensures that employee satisfaction and customer satisfaction are inextricably linked at John Lewis.
And Andy Street, John Lewis' MD since 2007, is under no doubt that this has an important role on the quality of service that customers receive - “When you go into one of our shops you are being served by an owner," he emphasises, "and that is bound to see you getting better customer service at the front line.”
The evidence certainly backs up Street's claims, with John Lewis winning UK Customer Satisfaction Awards and Britain's Favourite Retailer Awards in the last two years, and contributing in no small part to its financial success, with the retailer enjoying a 9.1% rise in sales over the financial year. With the structure of the company, this has translated into its 84,700 staff reaping an additional 17% bonus, worth nine weeks' pay - the smiles may have been that bit bigger on the shop floor recently.
And lets put that in context. The last few years have arguably been the most turbulent in the history of the British High Street. Retailers such as Jessops, Comet and Blockbuster have gone to the wall. High Street institutions have been forced to contend with unprecedented change in the retail landscape. The impact of the recession has been huge, but the impact of the internet and now mobile (via the trend of ‘showrooming’) have fundamentally changed the way consumers shop - and often to the detriment of the traditional bricks and mortar business.
So just how has John Lewis continued to outperform its rivals and deliver strong profits when others have struggled so much with the modern multichannel shopper?
Much can be attributed to the brand's continued focus on delivering a seamless customer experience across in-store and online channels, using both to complement the other. As far back as June 2012, long before it emerged as a buzz word, Street told the audience at the British Retail Consortium (BRC) Symposium event that John Lewis would be strongly pursing an omnichannel strategy.
“The strategy's quite simple,” he explains. “We know that about 60% of our customers buy both online and in shops so the approach is to make it absolutely seamless for them to move from one to the other. So they can research in one place and shop in the other, they can buy in one place and pick up in the other – the art of sales is consistent across channels, so the whole approach is to make it channel agnostic. They’re not even supposed to know or see or realise which channel they're using because it's one overall customer offer.”
The British retailer is doing this by delivering a number of new innovative shopping experiences. In October last year, John Lewis opened its very first ‘omnichannel store’ in Exeter – offering the full list of John Lewis products in a smaller store through the use of online technologies. Meanwhile, its Click-and-Collect service, launched in 2009, evolved to allow shoppers to purchase products online and collect them from John Lewis and Waitrose branches across the country, and continues to expand.
“Click-and-Collect has been fantastic,” says Street. “That grew by over 100% last year based on Waitrose and the next thing we've announced that we'll be doing is moving to Collect+, which will be based at 5,000 locations across the country. We’re trialing it in three regions in the third quarter. The recent introduction of product personalisation online has also been very important. As part of ‘My John Lewis’, you'll be recognised as an individual, we know you’re whole purchase history and will make suggestions as to what you might like to buy given your likes.”
John Lewis has also announced a number of innovative concepts improving customer experience through the use of digital. In November 2011, John Lewis opened its first 24 hour virtual shop in the Brighton Waitrose branch. Customers could scan QR codes of products displayed in the shop window, and on doing so, were then taken to the mobile version of the retail site to make purchases. The introduction of virtual mirror technology at its Oxford Street flagship also let shoppers ‘try on’ up to 500 different garments by superimposing the outfits on the shopper’s image, taken by cameras.
The retailer has also been innovative in using mobile to complement the in-store experience, such as its iPhone app that enables customers to scan barcodes of products in-store and order via the mobile site if they’re out of stock.
“Mobile is very important; it's the fastest growing area for us," says Street. “Last Christmas it was up about 200% and it's going to be the fastest growing area this year, particularly in fashion,” explains Street. “So we've already got transactional mobile site, our apps area average but by the end of this year I want the very best in the business. And that's what we are expecting to achieve.”
But the MD admits that not every innovation is an immediate success: “We trialled the virtual mirror but we're not going to roll it out. It’s a great idea and great fun but it's a question about how much information has to be put into the system from the different suppliers to be able to do it so we're not going to roll that forward. The QR code scanning that we trialled in Brighton has a long way to go because obviously we are expecting customers to come into the shop, scan the price ticket with the code and do it all on the mobile.”
Nonetheless, Street believes that they deserve their success when you make comparisons with their competition. “There are outbreaks of good practice and lots of retailers are doing bits of it but I don’t think anybody has really got the entire multichannel...and we haven’t to be frank, but we are probably in a good position in terms of having brought lots of it together.”
And the store’s peers certainly seem to acknowledge that position. John Lewis was a recent recipient of Multichannel Retailer of the Year at the Retail Week Awards, as voted by a panel of judges from the industry.
So as a 150 year-old retailer leading the pack with innovative customer experience strategies and technologies, what advice would Street give to businesses looking to do the same?
“The most important thing is to have a long-term business strategy. The model on its own isn't sufficient. You’ve got to have a real clear view about where you compete. For us, we compete on products and service and that fits our business model. The key thing for every business is to decide what you really stand for.”
With John Lewis now having over 40 stores nationwide, and with plans for 10 new stores under a new smaller format in city centre locations, its growth has been robust, even under difficult economic conditions. It's ability to adapt to the changing shopping and technological environment is a testament to the fact it is a true retail giant. But despite this, Street insists the organisation is still small at heart.
"The company's grown but has still managed to make it feel like a local company through out structure of the branch being relatively independent," he says. “Small companies have more potential – that collective is much more real and nearer to the coalface, and that's been the whole success of John Lewis."