Following the announcement that Paula Nickolds has been promoted to managing director of John Lewis, Drapers looks at the top priorities for the department store “lifer” as she takes the reins from Andy Street.
The high street stalwart is often revered as a bellwether of the industry but even John Lewis is not immune to the changing retail landscape. In September the firm revealed that operating profit fell 31.2% to £32.4m for the half year to 30 July as the retailer invested in pricing, pay and logistics.
Retail costs are rising across the board following the introduction of the living wage, business rates revaluations - which will begin to come into effect from next April - and the devaluation of the pound. This, coupled with an increasingly promotional high street, signals a need for Nickolds to increase efficiency and focus on the bottom line, which will not be an easy challenge moving into 2017.
Like many bricks-and-mortar retailers, John Lewis has enjoyed phenomenal online growth over the last couple of years. A third of its sales now take place online. Simultaneously, however, in-store sales are falling - down 1% in its latest full year results - so Nickolds and her team must look at how to entice shoppers back onto the high street (and into shopping centres) by creating retail theatre.
John Lewis has made significant investments in its property portfolio of late, opening in Birmingham, Leeds and Chelmsford. The retailer claims the store’s primary role now is for click-and-collect, but that makes it a pretty pricey collection depot. Simply put, the shops need to yield return on investment.
Following on from boosting in-store traffic, pushing the firm’s multichannel offer is essential to increasing turnover and profit. John Lewis prides itself on its seamless omnichannel offer and it’s an area Nickolds needs to keep a firm eye on in an increasingly competitive market. Customers’ expectations of delivery times and prices have been forever altered by etailers like Asos and Boohoo, so meeting those demands is a must in order to vie for market share and succeed.
Pushing product innovation
In her formal role as commercial director at John Lewis, Nickolds was in charge of product, and this must continue to be a focus. Fashion retailers are competing with the entertainment and travel sector like never before for spend. Rather than just drawing a shopper’s eye from the window display next door multiples, department stores and independents now have to justify their offer to the consumer over a meal out or a holiday.
As the economy becomes more unsettled, buyers tend to err on the side of caution, but Nickolds and the John Lewis fashion team need to push for excitement by introducing smaller niche brands and interesting designs in order to rise above the monotony of so many of their peers.