Fashion to play a significant role in new mid-sized John Lewis department store format for second-tier towns

The 70,000 sq ft store in Exeter will open in 2012

John Lewis has fired the starting gun on a new phase of expansion with a strategy to open mid-size department stores that leverage its multichannel operations.

The change will enable John Lewis to stamp its footprint on more cities across the UK. The first of the new format stores will open in Exeter in autumn 2012 comprising 70,000 sq ft, compared with an average John Lewis department store of 132,000 sq ft. Homewares will be prominent but it will also have a strong fashion and electricals offer.

Commercial director Andrea O’Donnell said the ambition is for Exeter to “deliver Oxford Street choice” despite having just 100,000 SKUs in-store compared with Oxford Street’s 350,000, through digital initiatives such as iPads on the shopfloor, to enable ordering.

The department store chain is also considering video streaming on the walls of its fashion department and digital ticketing. O’Donnell said it is considering the options for a “small representation [of product] on the shopfloor but using digital to show the breadth”. It will also operate click-and-collect.

John Lewis is eyeing more than 10 further locations in second-tier city centres for the new format, although it is unlikely to open more before 2013. The mid-size shops are expected to generate sales of between £40m and £80m a year, versus £100m for larger department stores.

The retailer already has four smaller At Home stores at about 40,000 sq ft, which it launched in response to most shopping centre developments being mothballed in the recession, resulting in it having to put its expansion plans for larger stores on hold.

However, O’Donnell said it is becoming increasingly important to have a fashion offer amid the downturn. “Fashion brings frequency and footfall, and in the current economic environment it’s more resilient [than home].”

The Exeter store was first slated to be an At Home store but the retailer asked developer Land Securities to remodel the scheme to allow it to open a mid-sized shop.

O’Donnell added that John Lewis remains committed to its At Home format, and plans 20 in the long run. “Home is still on the agenda. It’s a big opportunity. Many competitors are struggling,” she said.

John Lewis managing director Andy Street said: “This new flexible approach allows us to forge ahead with our growth plans to introduce our full-line assortment to cities and towns where we have long wanted to have a presence.”

40% of John Lewis’ target market is beyond a 40-minute drive. “We want to reduce that to 20%,” said O’Donnell. “Our customers tell us we need to be more convenient. We’re confident we can see traction for these department stores.”

The 32-store retailer wants a total of 60 shops, comprising large department stores, mid-sized department stores and At Home shops. It plans to double turnover in the next 10 years, through stores and online. “Bricks-and-clicks are integral,” said O’Donnell.