Proposals to rip up JLP’s long-standing 100% employee ownership model have whipped up a media storm. So much so that, on Friday, JLP chairman Sharon White penned a lengthy LinkedIn post in response.
She stressed no decision had been taken yet, and any change to the model would be discussed “with our Partners first”.
Her responsibility was to ensure the “partnership model not only survives, but thrives for another 75 years”, White added. And its latest annual results highlight the scale of that challenge: JLP this month revealed it had sunk to a £234m loss following a series of challenges.
But this didn’t stop an outpouring of reaction across papers, social media and TV this weekend. Some responses were emotional, while others were more hard-headed.
Here’s our roundup of the key points in the expert reaction.
“It’s lost its soul”
Arguably the most-high profile reaction came from Britain’s self-labelled queen of shops, Mary Portas, on Friday. She wrote to White and newly appointed CEO Nish Kankiwala “on behalf of the nation”.
She warned one of the “most valued, trusted and loved retail brands” in the country had “lost its soul”.
Portas stressed this was not a purely financial decision. “You’re fighting to save part of our collective cultural identity,” Portas said.
That emotional element also came through in the response of Andy Street, former John Lewis lifer and now mayor of the West Midlands. It would be a “tragedy” for John Lewis to dilute its model, he argued.
On BBC’s Sunday with Laura Kuenssberg, Street was keen to stress that John Lewis was far more than a shop.
“John Lewis was about a way of doing business, showing the market there was a better way, and that’s potentially under threat.”
His solution? Sell more. “You have to address the underlying point.” This had been key to the John Lewis model surviving for 150 years, he pointed out. “If you can’t go to the equity markets, you have to trade your way through it.”
Is there another way?
Given the reluctance for John Lewis to end its employee ownership model, many experts were keen to suggest alternative solutions.
One former John Lewis director even mulled the sale of Waitrose. “The two businesses have only ever integrated piecemeal, in terms of click & collect,” the ex-director told The Grocer. “They are two very distinct businesses. Go back 20 years and Waitrose was a basket case. In the last 10 years it’s been the other way round.
“Now both are struggling, for different reasons. But what’s the economic logic in selling a stake? They could just as easily sell Waitrose. That would get money into John Lewis.”
Julian Richer, founder of high street hi-fi chain Richer Sounds, suggested a less radical solution. His strategy would be to reduce borrowing by increasing profitability, rather than bringing in investors. “I’d retrench. I would get rid of loss-making stores and onerous leaseholds if I could. It is important to own your stores if you possibly can,” he told The Guardian.
If it were down to him, “outsiders wouldn’t be welcome”. He speaks from a positive experience with employee ownership. In 2019, he sold 60% of his chain to its employees, and gave them a hefty £3.9m bonus.
Focus on retail
High retail standards should always sit at the heart of JLP, commentators and analysts have stressed.
Portas pointed to the US department store chain Dillard’s for inspiration. “Their secret? Family owners who are true custodians of their business with no investors to answer to – they walk the shop floor, keep a constant eye on stock levels and have hugely loyal staff. They’ve also resisted calls to knee-jerk change.”
Street echoed that sentiment in his interview: “Some of the best retailers at the moment – Next, Primark, Selfridges – are proving physical retail can still do that, and that’s really the challenge to John Lewis and Waitrose.”
Peter Williams, the former CEO of Selfridges, questioned plans to inject cash into the business through a £500m deal with Abrdn to develop 10,000 rental properties.
“Using spare space is fine but if you go too heavily into that and suddenly become a property company, as that’s not your skillset it could prove a distraction. Let somebody else do the heavy lifting,” he told the Guardian.
Should parliament get involved?
MPs have even got involved in the furore. Gareth Thomas, Labour MP for Harrow West and chair of the all-party parliamentary group for mutuals, suggested it was a matter for parliament.
On Wednesday, Thomas plans to introduce the Co-operatives Permanent Shares Bill to the House of Commons, according to the Evening Standard. He said the bill could help John Lewis stay completely employee-owned.
The proposals would allow mutuals and co-ops to issue shares to investors in a similar way to traditional loans or bonds, without giving up ownership rights. “It would potentially help co-operatives and mutuals access significant capital to invest in their businesses, expand the services they offer, and more,” he said.
Will customers really care?
Despite the emotionally charged reaction from analysts and former employees, it’s debatable whether that sentiment will really pass to consumers.
Shoppers are likely to be forgiving, said retail analyst and founder of Retail Reflections Andrew Busby.
“Whilst consumers these days are far smarter than ever before, other factors such as product, value, service and experience are higher up their list of priorities than the structure of the retailer,” Busby said.
And for White, the priority is to make sure the retailer thrives. So despite the immediate backlash, the option remains on the table. Whatever happens, there’s no doubt emotions will be running high.
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