How John Lewis Found Its Footing Again by Going Back to Basics
After years of costly detours, John Lewis is finally back on track — and the secret was simpler than anyone expected. Profits are up, bonuses are back, and the strategy is refreshingly straightforward
How John Lewis Found Its Footing Again by Going Back to Basics
For a business that spent several post-pandemic years chasing ambitious reinventions, the most effective remedy for John Lewis turned out to be remarkably unglamorous: cut costs, focus on retail fundamentals, and stop trying to be something it was never meant to be.
Abandoning the Grand Experiments
In the wake of its Covid-era struggles, the John Lewis Partnership explored some genuinely eyebrow-raising strategies. One proposal floated the idea of bringing in outside investors — a notion that was swiftly torpedoed by an outpouring of opposition from both customers and staff, who were fiercely protective of the group's century-old employee-ownership model.
Another venture — an ambitious plan to develop around 10,000 build-to-rent homes — actually got off the ground before being scrapped by newly installed chair Jason Tarry just weeks ago. The logic behind ditching it was straightforward: the entire project had been built on the assumption that interest rates would stay close to zero indefinitely. Once that assumption collapsed under the weight of economic reality, so did the rationale for the project.
The Numbers Tell a Quiet Success Story
With the distractions cleared away, the more conventional elements of the turnaround plan are beginning to bear fruit. The partnership reported profits of £134 million for the most recent financial year — a 6% increase on the prior period. While that figure remains well short of the heights achieved in more prosperous times, it was sufficient to unlock a 2% bonus for the company's employee-partners, the first additional payment of its kind in three years.
Tokenistic as that bonus may seem, it carries symbolic weight. It signals a degree of financial confidence that has been notably absent throughout much of the recent transformation period.
Perhaps even more telling was the group's operating cashflow figure of £595 million, representing a 63% jump year-on-year. That kind of cash generation effectively removes any residual concerns about the strength of the balance sheet and gives the business room to continue reinvesting across both its John Lewis department stores and its Waitrose supermarket arm.
Pruning the Portfolio and Sweating the Small Stuff
Two key factors have driven the improvement. The first was a difficult but necessary decision made under former chief executive Dame Sharon White to reduce the size of the John Lewis department store estate — down to 34 locations — despite considerable public backlash in areas that lost their local branch.
The second factor is squarely in the realm of operational discipline. Improvements such as restructuring staff shift patterns to ensure more employees are on the shop floor during the busiest trading periods, and a thorough overhaul of outdated IT infrastructure, have quietly added up to meaningful gains.
Ongoing productivity initiatives include rolling out electronic shelf labels across Waitrose stores and streamlining the supply chain — a new distribution centre in Bristol, for instance, is now serving Waitrose branches throughout south-west England. None of these moves are groundbreaking. But for a retail group with total annual revenues of £13.4 billion, operational efficiency is precisely how competitive advantage is rebuilt, particularly in an environment where high street rivals have thinned out while online competition has intensified.
Refocusing the Business Model
The partnership has also quietly stepped back from some of the loftier ambitions that characterised the White era. Her goal of generating 40% of profits from non-retail activities was abandoned before her departure, and the collapse of the build-to-rent project has renewed scrutiny of what role John Lewis Money — the group's financial services division — should play going forward.
For now, it appears secure. Chair Jason Tarry has described it as a core enabler of the retail strategy, suggesting it functions as a blend of credit facility and customer loyalty mechanism. That puts it in broadly the same territory as similar operations run by major retailers like Next. The partnership is currently expanding into insurance products, and the logical next step would be the introduction of a fully integrated loyalty card spanning both John Lewis and Waitrose. The current perk of free coffee at Waitrose, while popular, hardly constitutes a compelling loyalty proposition on its own.
A Long Road Still Ahead
Management has struck a cautious tone on the trading outlook — understandably so, given the ongoing uncertainty around inflation and consumer spending. The so-called multi-year transformation is very much still in progress, with considerable operational work remaining before the partnership can confidently claim it has fully turned the corner.
But the direction of travel is now clearer and more credible than it has been in some time. By stripping away the noise and returning to the principles that built the business in the first place, John Lewis appears to have rediscovered something valuable: the enduring power of simply doing retail well.
