With the pandemic leaving London’s West End devoid of workers and tourists, the news earlier this week that John Lewis has been green-lit to turn half its Oxford Street store into office space received mixed reviews. Industry experts offer their view on whether it’s the right move for the retailer. 

Jonathan De Mello, equity partner, CWM

Jonathan de mello harper dennis hobbs

John Lewis receiving planning consent to turn more than 50% of its Oxford Street store into offices is a turning point for retail space repurposing – with local authorities recognising the need to facilitate change. 

Department store retailing necessarily needs to evolve and downsizing of physical retail floorspace is part of that.

The multi-floor model – with bulkier product categories found on upper floors that can be bought more cheaply on the internet – leads to lower retail sales densities overall. This space is now better served by other property uses, such as offices. 

Office space enables John Lewis to gain rental income from office tenants that, hopefully post-Covid, would be keen on securing space in the heart of the West End.

This will enable them to continue trading in Oxford Street given the costs of operating the store – chief among which is their annual business rates bill of £10.4m. 

Even with this reduction in retail floorspace, the size of the retail element would still be comparable with that of House of Fraser and Debenhams on the street.

Personally, I feel a mix of residential and offices would have worked better at the site, given significant demand for West End residential space and a chronic lack of supply. 

 

John Ryan, managing director, Newstores

John Ryan

More, or at least the same, from less would seem to be the underlying principle as regards chopping the space occupied by the John Lewis flagship on Oxford Street in half.

The store has always seemed a mite over-endowed as far as its selling area is concerned, and getting from one part to another has always been a hike.

Two atria, a series of mega-escalators and a basement where it is possible to lose your way make this a store that is ripe for alternative thinking. The question has to be whether the space freed for offices will prove attractive at a moment when working from home is the order of the day.

Working on the assumption that the current state of affairs cannot prevail endlessly, however, putting a quart into a pint pot looks an overdue move.

This may be a store offering almost everything for the home, clothing, beauty and a pretty good deli-cum-food hall, but decisions will have to be made about what remains. Things will have to give and it seems likely that the number of hospitality elements will be cut.

There will, of course, be categories that perform less well than others and here too the axe may fall.

This will be a big store even when only half of it is left.

 

Hugh Radojev, senior reporter, Retail Week

Radojev, Hugh

It’s hard to argue that John Lewis’ Oxford Street store isn’t too big for its own good and, in terms of retail space anyway, in need of downsizing.

A 50% reduction is, some might say, a good start and even more floorspace could stand to be repurposed. 

However, even holding both those points to be true, John Lewis’ choice to give it over to office space seems ill-conceived given the monumental societal shifts being driven by the pandemic. 

Data from the Chartered Institute of Personnel and Development published in September found that both employees and employers are expecting to work more from home post-pandemic than they did previously.

There is also empirical data showing that many employees have found they are just as productive working from home and are actually happier in terms of work-life balance. 

This change in thinking has led to a physical shift, too, as many workers have used the pandemic as an excuse to quit the suburbs and satellite towns of city centres such as London for places less commutable but more desirable to live. 

The strategy may well bear fruit, provided John Lewis can find tenants, but unless office occupancy rates skyrocket post-pandemic it’s hard to see it being the silver bullet to its retail property woes.

 

Neil Saunders, managing director, GlobalData Retail

Neil Saunders

The branch number of John Lewis Oxford Street is 001. That prime position reflects its status as the company’s birthplace and, until online overtook it, the most important selling location.

Sentimentality does not protect from commercial realities but, even so, converting almost half the space to offices feels wrong.

Arguments that online is taking a greater share of sales and that footfall in London has diminished can both be advanced. But neither of these things is permanent and both will unwind as the virus abates.

As such, John Lewis is betting its future on an unlikely trajectory. And, of course, it should really put more effort into making the space it has work, rather than taking the easy way out and ditching half of it.

There is absolutely no doubt that some reduction of space is needed. But cutting so much and so fast just seems rash and desperate.