When new chair Dame Sharon White walks through the doors of John Lewis Partnership’s headquarters for the first time next month, she will not be welcomed by all the members of the executive team she expected.

Paula Nickolds, the John Lewis & Partners managing director, has become the latest big name to depart as the business goes through one of the most radical overhauls in its history. The restructuring has already cost 75 senior managers their jobs as one of the UK’s most unique and revered retailers battles to adapt to new realities.

Paula Nickolds

Paula Nickolds was expected to become JLP’s executive director of brand

Nickolds’ surprise exit next month ends a 25-year career at John Lewis, where she started as a graduate trainee and rose to run the pioneering department store business.

She is not the only high-profile director to leave, prompting questions among many in retail about whether John Lewis is throwing the baby out with the bathwater in the radicalism of its plans. Nickolds follows Waitrose & Partners managing director Rob Collins through the partnership’s revolving doors.

However, unlike Collins, who felt there was no role he wanted in the new unified executive team structure as the divisional boards of each business were dissolved, Nickolds was expected to become executive director of brand and steer it to heady new heights.

She leaves in the wake of a tough Christmas. Although like for likes rose 0.4% at Waitrose, they slipped 2% at John Lewis.

Broker Shore Capital notes: “With a new management structure combining roles across both businesses to bed in and losing a third of the senior managers across both businesses during peak trading, this Christmas trading statement highlights the extent of the change that is needed, particularly from the department store format.

“In our view, John Lewis department stores should be performing better in trading terms given that its two principal competitors have struggled in recent years and will both downsize their store portfolios.”

Daunting prospect

Profits at the department store business “will be substantially down on last year” as will those at the broader partnership, casting some doubt on whether the famous bonus will be axed. That has not happened since 1953. Were it to come to pass in 2020, it is a decision that could shatter already fragile confidence among its workforce.

White, who brings an impressive CV but is not a retailer, succeeds Sir Charlie Mayfield at a time of uncertainty for the bellwether business and its staff, overseeing a new structure that had already raised eyebrows. Without the experience of Nickolds and Collins to call upon, it looks like an increasingly daunting prospect.

Beyond saying that he and Nickolds “reached a decision” that it was time for her to move on, Mayfield did not elaborate on the background to her departure, though he refused to shut down the suggestion she had been ousted. Some have speculated that Nickolds may have decided the new structure did not suit her or might be wrong for the business. “Did she wonder whether she would end up being part of a complete f**k up?” asks one retailer.

“This plan was not mine, hatched in secret, it was developed by the whole executive team… We’re not just mashing together the two brands”

Sir Charlie Mayfield, John Lewis Partnership

Mayfield is emphatic, however, that the new structure and strategy are right for the partnership in the long term. The objective is to provide shoppers with an enhanced offer while gaining synergies by bringing John Lewis and Waitrose closer together.

Asked whether he regretted the merger, Mayfield says: “Not at all. The interesting thing is that the partnership is absolutely behind this change.

“This plan was not mine, hatched in secret, it was developed by the whole executive team including Rob, including Paula, who were fully supportive.

“We’re not just mashing together the two brands in an unthought-through way.”

Perspective and experience

So why is Nickolds leaving? Mayfield says: “People’s preferences and perspectives change. Paula and I have reflected on this and reached the decision we reached. My perspective is what we’ve done and what we’re doing is the right thing.”

The streamlined executive structure had already surprised some because of the absence of anybody from Waitrose, which accounts for the bulk of the partnership’s sales and profits.

Mayfield says the new board includes experienced leaders such as customer services supremo Berangere Michele and finance boss Patrick Lewis who have held various operational roles at the business over many years.

He says: “We’ve got really deep experience. If you look at people on the executive team there are over 100 years of partnership experience and beneath that, there is a vast pool of people with experience.”

“In the bits of the business that customers don’t see, there must be some synergies, but they have to be careful with the brands”

Peter Williams, Superdry

He maintains it is wrong to think there is nobody senior in charge of the day-to-day operations of each division, despite abandoning the role of managing director. He says: “What we haven’t done is missed the point that there’s a difference between buying ready-meals and buying beds.”

He points to longstanding executives such as Waitrose commercial director Rupert Thomas and John Lewis trading director Simon Coble, who will continue to play pivotal operational roles.

Peter Williams, the Superdry chair who has wide-raging experience of department stores and retail restructures, can see the logic in Mayfield’s plans but believes success will be in the execution.

He says: “I start from the position of the customer and I’m a big fan of John Lewis, Waitrose and online. In the bits of the business that customers don’t see, there must be some synergies, but they have to be careful with the brands.

“Sometimes they can be a bit internally focused, like with the ‘& Partners’ [rebrand]. It means a lot to them internally, but it’s not a big deal to shoppers.”

Harsh conditions

Mayfield maintains that enhancing the shopping proposition is at the heart of the structural changes.

He says many John Lewis customers do not realise they can collect online orders from Waitrose stores, while the grocer’s customers can be surprisingly ignorant of the services provided by John Lewis, even when two branches are close by.

Sharon White

Dame Sharon White becomes chair of JLP next month

Despite the tough Christmas, he argues that performance in fields such as availability, service and delivery demonstrates just how strong the business is.

He is confident that White knows what she is walking into. He says: “I’ve been working pretty closely with Sharon for about eight months now. We discussed some of the changes as far back as May. Sharon has spent considerable time getting to know the business and she’s supportive of the decisions we’ve reached.”

Williams observes that White’s arrival at a time of such change may bring some challenges. He says: “Bringing someone in who doesn’t have a retail background is in some ways great – they have no prejudices.

“But it’s quite a tough job for them to decide who to believe. As they work their way around a company, they’re trying to work out what’s going wrong or right and make informed judgments and that’s difficult.”

Shore Capital adds: “We get the sense that Sharon White will instigate a big change programme, which is perhaps long overdue at the John Lewis Partnership.”

While the partnership has endured harsh conditions, Mayfield believes it is well placed for the future. The changes that become effective next month are a culmination of a shift that began in 2015 with decisions including calling a halt to physical expansion as the retailer adapted to changed market conditions.

Sowing the seeds

One thing at John Lewis looks unlikely to change – its Never Knowingly Undersold promise.

In a fiercely promotional and price-driven environment, some believe the pledge is more of a hindrance than a help. Not in Mayfield’s view.

He insists: “Sometimes people seem to think we’re the victims of that policy – that’s not the case.”

He scoffs at the idea that customers would be prepared to pay more for goods they could buy cheaper elsewhere and that they expect to get brands “they love and want”. That said, an increasing shift to own-brand and exclusive product should mitigate the need to price match.

The landscape in which John Lewis operates may be harsh, but according to Mayfield: “You have to use the winter to sow the seeds for the next harvest.”

As White prepares to take charge, she will hope the changes she will now lead result in green shoots that grow and blossom, and not a bitter harvest. One of the first decisions she will be faced with is whether or not to pay that iconic partnership bonus. It is a call that could set the tone for her tenure. 

John Lewis: As Nickolds exits, is Sharon White entering a disaster zone?