June 02, 2017 Industry news
At our recent industry conference, Dino Rocos, Operations Director at John Lewis, talked about how John Lewis has evolved into one of the most successful online retailers – adapting to changes in customer behaviour.
John Lewis started 153 years ago, at a time when shopkeepers knew their customers individually and tailored their products to make them more personal. Then the retail business moved into a mass-market model, making products from around the world available to customers. But now, John Lewis has almost turned full circle, adapting to changes in customer behaviour and focusing on giving each customer a personalised experience – just as retailers did 100 years ago.
“There are billions of products produced across the globe, and to make them all available to customers, becomes challenging. A customer doesn’t want to look through an entire assortment, they want to find what’s right for them. The stage we’re now in is mass-personalisation; not restricting the assortment to what’s locally produced, but moving to a place where it’s tailored to our customer.”
John Lewis goes online
“Our agenda was not one about growth – we had no aspiration to get bigger for the sake of being bigger. We started to see the customer moving in a different direction so we introduced new formats.”
15 years ago, John Lewis thought there was a trading opportunity for them online and bought a small internet business. They took a view that if they were good at what they did they could be trading in excess of over £150 million online.
“Someone said to us at that stage that we could never get that big…Our internet business today isn’t £150 a year…It’s £1.7 billion a year.”
John Lewis’ online trade has grown to 41% of total sales – and it has done so through retaining their customers and customer loyalty.
Trading under pressure
“I would like to thank the US, from the bottom of my heart, for providing us with the opportunity to import Black Friday to the UK!”
Black Friday is one of the biggest peaks of retail in the year – and this peak provides enormous problems for retailers. But customers are still very clear they want consistency of service. They’re not concerned about the busy periods; they expect to purchase today and click and collect tomorrow.
“We were and are able to achieve this because we have invested heavily in our supply chain. In the last five years, we have invested £528 million in new technologies, and new automated distribution centres. We have invested for us to be able to succeed in what is an incredibly challenging retail market.”
How John Lewis uses GS1 standards
“The standards are incredible. When you invest in automation, what becomes clear is that it provides you with a huge opportunity – you are creating something new…You are also creating a new ecosystem which requires skills and capabilities which historically has not been available to us…We work closely with our suppliers to create new mechanisms – a new functionality.”
GS1 standards feature throughout John Lewis – not just the traditional barcode, but increasingly RFID. The ability to track products both into and through their operations, at the rate of six cartons every second at peak, throughout a full 24-hour day, is business critical. Without GS1 standards, John Lewis would simply not be able to operate. And without GS1 standards, they certainly could not successfully interface with the service providers they work with.
“RFID is not brand-new technology, but what we see is a new opportunity that comes with it. Historically, RFID would provide you with an opportunity to drive availability on the selling floor to reduce stock loss. And what you did was do the calculations to understand the benefits vs costs.”
“We see a growing importance in working capital in the control of absolute stock levels, but we also see the ability to use the accuracy that RFID provides to fulfil our orders online when there is a slowing of sales through the physical estate. As a result, we are seeing more significant opportunities in stock exits and improvements in our operating margins.”