Dame Sharon White acquitted herself well at her first appearance before the John Lewis Partnership’s council last week.

The first outing before staff at any business is a key moment for any incoming leader but at an institution such as the partnership, whose mutually owned status and heritage make it unique, it is all the more important to get right.

The partnership’s new chair came across as authentically aligned to the organisation’s values, but at the same time told some home truths, making it clear that things cannot continue as they are if the department stores and grocery business is to survive and thrive.

Two observations went to the heart of some of the retailer’s present difficulties. White pointed out that last year the retailer paid out about £23m in goodwill payments to customers “when we didn’t get things right first time”. There aren’t comparable figures available from other retailers, but that sounds like a hefty sum.

The problems that prompted such recompense, even if rectified, won’t do anything to encourage repeat custom and that is an own goal to the bottom line. White went on: “If we won back the best customers we lost last year, our profits would be up £100m” – a sobering thought as the retailer prepares to post profits that are expected to be “substantially down” at the department store arm, although Waitrose’s earnings will hold up.

Step up to the plate

White preceded her comments with a personal anecdote about her participation in a bake-off contest as a child. As she prepared for the competition, she asked herself: “What’s the best way to get an edge?”

How well she answers that question in her new role will define her tenure.

As department stores across the board struggle to resonate with shoppers, John Lewis has sought to make high standards of service and the provision of services a unique differentiator. White’s observations show, however, that high aspiration is not reflected in the reality experienced by shoppers.

“White brings a different energy and style to the partnership, very different from the more traditional corporate chiefs”

To be highly valued by the customer, such a positioning needs to be near-flawless and that is far from the case. Partners, who perhaps became a bit too satisfied with themselves as they basked in the glow of years of good performance and bonuses, will need to step up to the plate and come good on their promise to the customer if John Lewis is to stand any chance of winning on a service proposition. That will require improved execution too, particularly in areas such as after-care on big-ticket purchases.

For John Lewis, putting clear blue water between itself and competitors on service is vital if it is to avoid being judged purely on value. Some observers argue the retailer should jettison its ‘Never Knowingly Undersold’ promise, but it simply cannot afford to do that if it is failing to provide added value to customers.

Whether or not it should abandon ‘Never Knowingly Undersold’, even if it does bolster credentials other than price, is at best open to debate and arguably a step too far. Very few retailers today, especially those catering for the mass market, can afford to be out of step on price on comparable products. John Lewis is building up its stable of exclusive product, which it does not need to price match and, if successfully executed, provides some insulation from the never-ending promotions that have beset the market.

Hard decisions

White made clear that hard decisions are likely to be in store at John Lewis, raising the prospect of job losses, store closures and no bonus for partners – the latter was surely an implication of her comment that the business is “not making as much money as we need to do to invest in the business, but also to invest in partners”.

She brings a different energy and style to the partnership, very different from the more traditional corporate chiefs. She is in many ways a welcome breath of fresh air.

But there is no getting away from the fact that she is taking the reins at a hugely challenging time and in the wake of an exodus of experienced retailers from John Lewis and Waitrose – including the businesses’ respective former leaders Paula Nickolds and Rob Collins.

As it has restructured, the partnership has made much of the bench strength it has below the senior ranks, which have been decimated in pursuit of creating one business. For White to succeed, it will require all hands to the pump from the partners to enact their employer’s values and deliver on the promise to customers. 

White lost that baking competition as a child, but you can only wish her good luck at JLP – a healthy John Lewis makes for a more successful retail industry.