Strategy

• Jason Tarry announced as seventh JLP chair from September 2024
• “Unashamedly” focusing on retail as it returned to profit in FY2023 
• £542m investment planned for FY2024 
• First new Waitrose stores to be opened in six years from 2024 
• 11,000 jobs could be culled in next five years  
• Extending Partnership Plan to complete in FY2027 instead of FY2025  
• Became first UK retailer to set net-zero science-based targets  
• Uniting data across the Partnership to drive efficiency  

New chair announced

John Lewis Partnership (JLP) chair Dame Sharon White announced her intention to step down from her role in October 2023, concluding what will be a five-year tenure in early 2024.  

The Partnership announced the appointment of ex Tesco UK and Ireland chief executive Jason Tarry as its seventh chairman in April 2024. Tarry had worked at Tesco for 33 years prior to his departure, and brings a wealth of retail knowledge from his career which spans grocery, general merchandise and fashion. 

He is expected to take up the role in September, at which point White will step down and support the transition as required. 

JLP deputy chairman and chair of the nomination committee Rita Clifton said: “The Board extends its huge thanks to Sharon for successfully leading the Partnership through one of the most testing periods in its history - first Covid and then the cost-of-living crisis. She has faced into the toughest decisions and overseen the Partnership’s financial recovery; we are in good financial health with a return to profit, and have a strong balance sheet with record investment planned this year. Sharon has also helped ensure that employee ownership of the Partnership is secure, is demonstrably focused on its purpose as a force for good and with an open and inclusive culture. 

“As the Partnership moves into the next phase of its modernisation focused on our core retail business as well future growth, we are confident that Jason will provide the kind of inspirational leadership, a proven track record in multi-channel, multi-category retail success and a strong identification with Partnership values that we are seeking in this role. Jason has impressed everyone throughout the interview process with his warmth, his belief in the Partnership’s ideals and democratic principles and his appreciation for our unique and special brands.” 

Of his new role, Tarry commented “The Partnership and its brands stand for trust, value, quality and service and it’s a great privilege to be succeeding Sharon as the seventh Chairman. The Partnership is unique and I’ve long been an admirer of the employee-ownership model, its values and Partner-led customer service. This starts with a sharp focus on being brilliant retailers for customers and investing in growth. I’m looking forward to working with the Board, Nish and the Executive Team to deliver its clear strategy.”   

Focus on retail

JLP announced it will “unashamedly focus” on retail as group profitability was restored for the year ending 27 January 2024 (FY2023).  

The Partnership delivered pre-tax profits of £56m versus a £234m loss the year prior. JLP said profit growth was supported by a further £111m of productivity improvements in the year, bringing recurring productivity savings since January 2021 to £420m against its £900m target to FY2027 (see below).  

In December 2023, it raised additional funding of £260m through a combination of the sale and leaseback of 11 Waitrose shops and a new term loan. 

JLP said it grew customer numbers by one million to 22.6 million in FY2023. 

Having completed the first phase of its plans – a return to profit – it says there are four key drivers as it moves into its second phase: 

• Energise its unique customer offer to drive growth 
• “Inspired service” delivered by its partners 
• Modernising its retail infrastructure 
• Significant investment fuelled by productivity  

JLP is stepping up investment from £312m in FY2023, to £542m in FY2024. It says it is “laser focused on providing a brilliant retail experience for our customers”. 

Initiatives include: 

• A record £116m investment in pay, which JLP says will result in two-thirds of its partners receiving a near 10% pay increase. 
• Modernising its technology.  
• Refreshing its shops – it plans to open its first new Waitrose stores (the first in nearly six years) as well as refurbish 80 over the next three years. 
• Within John Lewis its focus is on “revitalising the home category” as well as improving the online experience. 

Having previously committed to generating 40% of its profits from services outside of retail by 2030, JLP announced the removal of a specific target for these additional revenue streams (build-to-rent housing and financial services).  

Partnership Plan extended 

JLP extended its Partnership Plan by two years in 2023, scheduled to conclude in FY2027 rather than FY2025 citing “a combination of inflationary pressures and greater than expected investment requirements”.  

It plans to triple the scale of productivity improvements to £900m by January 2027.  

As JLP grapples with cutting costs, it was revealed by The Telegraph that its redundancy package has been halved for its employees. JLP now offers one week of pay per year of service instead of two for any partners being made redundant from 1 February 2024, this is in addition to statutory redundancy pay.  

A spokesperson for JLP said: “What we are doing is cost-neutral and it is a rebalancing because any saving on redundancy pay will be directly reinvested into partner pay.”  

This was followed by news that the retailer may be looking to cut as many as 11,000 jobs over the next five years as it seeks to turnaround it fortunes to sustain profitable growth.    

It said: “The John Lewis Partnership has a plan to return to profit, which involves investing heavily to enhance our customer offer, technology, stores and becoming more efficient.  

“This is working and performance is improving, but as we have already announced, that sadly means reducing the number of Partners we need in our business.”  

Employee numbers at the Partnership have already fallen from highs of some 92,100 in FY2014 to 76,400 by FY2022, according to Retail Navigator data. 

In October 2020, outgoing chair Dame Sharon White had unveiled her five-year strategy for the John Lewis Partnership.   

The five key areas of strategic focus:  

• Driven by purpose – based on customer and partner feedback, the group’s purpose should be “modern, relevant and inspiring, while staying true to our core principles”. At its core will be themes of tackling inequality, wellbeing and sustainable living.  
• Simplifying how the Partnership works – looking to take out duplication and cost, the retailer targeted at least £100m of savings in head office costs.  
• Strengthening retail – acknowledging the coronavirus pandemic having accelerated the importance of digital, White said: “We expect John Lewis to be a 60% online retailer, from 40% pre-Covid-19, and Waitrose to rise above 20%, from 5%”.  
• Expanding into more services – for long-term sustainability JLP needs to expand beyond retail where profit margins are under pressure. It will seek to add new services such as private rented housing.   
• Strike partnerships to power growth – partnerships will be created “with other businesses that respect our ethos and can bring resources or capabilities we don’t have”. White added: “This will allow us to grow efficiently. Partnerships will give new meaning to our ‘& Partners’ rebranding. We are already in a number of commercial discussions and are also looking at acquisitions.”  

Laser focused on cost  

As it entered the third year of its Partnership Plan, JLP revealed its mantra for 2023 to be “cost out, margins up and customer focus”. In the current high-cost environment, the business set itself the new target of a further £600m of efficiency cost savings by 2027, as it once again ‘steps up’ its transformation. It made savings of £300m over the previous two years.  

Part of its cost-cutting initiatives include plans to re-size its John Lewis head office. Its lease on its 171 Victoria Street building, which spans 220,000sq ft, is due to be exited by the end of 2024.  

Although FY2022 revealed high customer numbers across the business, its costs soared nearly £180m year-on-year with a huge impact on profitability.   

Revenues outside retail  

JLP announced its £500m joint venture with global investment company Abrdn in December 2022 to deliver around 1,000 new homes across three local communities, choosing Bromley and West Ealing in Greater London and Reading for its initial homes.  

It submitted its first planning applications for ‘build-to-rent’ sites at West Ealing and Bromley in June 2023.  

Improving and expanding analytics capabilities  

JLP has been working with Snowflake since 2021 to unite its data sources and deliver analytical insight across the business.  

As a legacy retailer, JLP had many disparate systems, but has unified these to leverage its data for the best insights. Uniting the data is helping it to work across a single brand - part of its pan-partnership ambition.   

Data platform Snowflake is used as a tool to access all JLP systems data that is uploaded to the cloud.   

As part of the data transformation project JLP is putting Tableau in the hands of its partners, allowing them to leverage these insights for innovation.   

Director of data management and intelligent platforms at John Lewis, Barry Holstead told WRC (World Retail Congress) 2023 that there are six pillars to JLP’s data strategy:  

• brilliant basics  
• data as an asset  
• self-service   
• education and engagement   
• business leading insights  
• product failures   

JLP now uses machine learning models to improve its pricing and promotions, all underpinned by Snowflake. Its supply chain forecasting team are using data to improve deliveries to stores, reducing time to shelf.   

£100m Google deal  

JLP announced its continued partnership with tech giant Google in August 2023.   

The £100m five-year deal will see JLP migrate more of its technology to Google Cloud, harnessing the cloud provider’s latest and most innovative technologies, including advanced artificial intelligence (AI) and machine learning (ML).   

The retailer aims to reduce the cost of hiring third-party software developers, and provide customers with more timely, relevant, and personalised offers.   

In late-2019 JLP had announced it had built a data management platform on Google Cloud as the cornerstone of the digital transformation of the unified business from 2020 - The Partnership Data Platform.   

Accelerated investment in customer loyalty   

JLP announced a five-year partnership with Dunnhumby and Eagle Eye at the end of April 2023, to help “deepen our relationships with our customers and provide them with even more benefits”.    

JLP stated that more than nine million customers are members of its MyWaitrose loyalty card with My John Lewis member having grown to five million as of April 2023.   

JLP said My John Lewis members shop more frequently at a rate of 2.5 times more than non-members.  

New pan-partnership head of loyalty  

As part of its loyalty ambitions, JLP announced the appointment of Emily Wells in the new role of pan-partnership head of loyalty.    

Wells, who starts in June 2023, will report into pan-partnership and John Lewis customer director, Charlotte Lock, and is tasked with developing and launching a new pan-partnership loyalty proposition in 2024 as well as leading and developing its MyWaitrose and My John Lewis loyalty programmes and teams.  

New creative marketing partner  

John Lewis Partnership announced a new partnership with Saatchi & Saatchi as its new creative marketing partner for John Lewis, John Lewis Financial Services and Waitrose in May 2023.  

Previously, it had partnered with creative agency Adam & Eve for over 14 years, until JLP decided to invite the agency to repitch in February 2023, an offer Adam & Eve declined.  

First UK retailer to set net-zero science-based targets   

JLP announced it had become the first retailer in the UK to have its net-zero targets validated by an official body at the end of June 2023.   

The Science Based Targets initiative (SBTi) - which JLP said is the “gold standard for setting and monitoring corporate climate targets” - validated the partnership’s target to become net-zero across its own operations by 2035, targeting its wider supply chain to reach this target by 2050.   

Director of sustainability at JLP, Marija Rompani said “Reaching net-zero by 2050 means transforming our business in every way, from how we design our goods to last, how we and our suppliers power our farms, factories and stores, and how we make it easier for our customers to make more sustainable choices.”   

Initiatives are focused on:   

• Decarbonising its supply chain   
• Reducing emissions through innovation   
• Prioritising circularity in product design and services   

JLP said it is committed to moving its vehicles away from fossil fuels within its own operations, as well as procuring 100% renewable electricity across all its operations.   

Within Waitrose, it will ask larger suppliers to set their own net-zero targets.   

It is set to launch integrated energy efficiency insights online for John Lewis products, so customers “can see at a glance how much money they can save by choosing a more efficient product”.