Business club hears of success story

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Here is the report on the latest meeting of High Peak Business Club, from Edwina Currie.

“You can definitely tell a lady from John Lewis – impeccable!” This was the approving comment of one member at his first sight of Maggie Porteous, director of selling, North, and new format for John Lewis department stores, which with Waitrose forms the John Lewis Partnership.

Maggie, born in Macclesfield, said she “stumbled” into JLP 27 years ago, loved it, and has been there ever since. She is currently responsible for around half of JL’s shop portfolio, which bring in two-thirds of its £4.4bn sales.

Since Mr Lewis opened his first Oxford Street store in 1864, this business has taken a different trajectory to most. The founder’s son, John Spedan Lewis, experimented with “industrial democracy”, eventually putting his shares into trust for the employees, who thus became co-owners, or “Partners.” Now, every year they each receive a share of the business’s profits – for 2014 it was 10 per cent of salary, but it has been as high as 24 per cent.

“It means,” said Maggie, “that we are not under shareholder pressure and can take a long term view. The pressure is all internal – everyone want us to do well.”

They have only 32 full-size department stores, compared to Debenham’s 225 or Marks & Spencer’s over 600. But all John Lewis stores are profitable. And they are BIG: the one in Cheadle employs over 800 people. They’re also experimenting with smaller locations: two airport shops have been brilliantly successful, so expect to see more John Lewis alongside W H Smith in future.

It’s a fiercely competitive world, stretching from computers to cabbages. So while sales were up 4.4 per cent last year, profits rose a fractional 0.2 per cent. Overall, UK consumer spend is rising steadily, but the amount spent on “stuff” has taken a dive. Cars, holidays, eating out are the growth areas, yet JLP still manages to shift an impressive range of fashion (from three semi-automated warehouses) as well as £2,000 sofas.

Retailing has changed dramatically. It’s an “omni-channel world” - 4 out of 5 of their shoppers use online at some point in the purchase, whether for research, for purchase or payment, and for “fulfilment” (delivery or collection). At Christmas a whopping 40 per cent of all John Lewis sales were online. “The public believe our delivery system can handle that surge, that goods will get to them in time,” Maggie pointed out. Online may not require huge fixed costs like the stores, but logistics agility and accuracy are still expensive to provide. That’s why they’ve started charging for Click+Collect for items costing under £30 – ”People were ordering a £2 greetings card..” she said.

Their latest idea is to offer a range of services including a beauty spa in Birmingham, all designed to tempt us into an Ali Baba world. That must be working, as High Peak Business Club members’ first questions revolved round parking in Cheadle. The car park has a whopping 1,600 places.. “Get there early,” was Maggie’s sage advice, though weekdays it’s also open till 8pm.

“We have to give customers a seamless experience – make it easy, reassure me, deliver,” Maggie ended. Market research shows the brand is loved and trusted. That must give an edge over Amazon Marketplace, especially for bigger purchases.

And what about that 5p bag charge? It raised £325,000 since its introduction last year, soon to be distributed to charities. That, we could all agree, is an excellent outcome.

The next meeting of the club is at 7.30am, on Friday, May 13, at Chapel-en-le-frith Golf Course. The speaker is David Thomas, CEO of Barratt’s builders. Details from edwinacurrie@sky.com

Pic cap: Pictured are Edwina Currie, Maggie Porteous, Mike Madden of Legacy IT, Whaley Bridge, Davud Castke of St James’s Place Wealth Management.