John Lewis' decision to blame declining sales on shoppers being distracted by the recent Olympics and school exam results will surely be ranked by excuse-watchers as about as plausible as that used in 2002 when some companies pinned their corporate misfortunes on the death of the Queen Mother.
Everyone knows it is a worrying time on the high street, but blaming Beijing 2008, which could have boosted the retailer's sales of sports equipment, seems disingenuous. A reading of the runes shows sales have fallen on 11 occasions in the past 17 weeks.
John Lewis, whose profits fell 27% in the six months to July, has become renowned for catering to the needs of the middle classes. But, as the recent slump shows, the retail giant might need to assess its appeal to customers. Increased competition from online retailers means John Lewis can no longer be 'Never knowingly undersold', and the retailer needs to come up with compelling reasons for people to shop at its stores.
Although its decision to invest heavily in renovating and developing stores illustrates that the partnership is building for the future, there does seem to be an image problem. The decision to use supermodel Karen Elson in its latest ad campaign gives an indication that this is being addressed, but will it be enough? We asked Alistair Green, planning group head at Bartle Bogle Hegarty, who handled the KFC and Levi's accounts, and Steve Hastings, planning partner at Isobel, who has worked on Harrods, for their views.
Diagnosis Two experts offer their advice on reinvigorating the John Lewis brand
Alistair Green planning group head, Bartle Bogle Hegarty
We have all been bombarded with the same dismal headlines, 'Recession fear' and 'It's going to get worse before it gets better'. It is not surprising retailers are suffering, including the British stalwart John Lewis, although M&S, Next and Laura Ashley are even worse off.
There are four tenets to a successful retail business: store, service, price and difference, and in all four John Lewis deserves pretty respectable scores.
Store - its decision to hold back marketing spend to fund large-scale refurbishment to its estate was sound.
Service - its level of service is superior to the competition, because employees enjoy the benefits of ownership.
Price - for its middle-class target, John Lewis is broadly competitive, although it is being challenged by e-shop prices, especially on electrical appliances.
Difference - most retailers struggle to provide consumers with a 'reason to shop'. John Lewis is blessed with three destination departments: haberdashery, fabrics and baby.
- Play to the brand's strengths. Shout louder about destination departments; all are relevant to an economic downturn.
- Confront value face on. Empathise with consumers having to tighten their belts. To be proactive, provide a branded promotional strategy.
- Invest to battle the storm. Continue expansion and investment in refurbishment and reformulate weaker departments. History shows that it is those frozen in the economic headlights who suffer the most.
- Build the online business rapidly.
- Online retail may be the only part of the business and the sector not to suffer during the downturn.
Steve Hastings planning partner, Isobel
It is always tempting to believe the great days are over when a major brand hiccups. It's become a journalistic sport to suggest John Lewis is in trouble as soon as it posts a decline in sales. In most cases, the bigger weekly sales drops can be explained by yearly calendar changes that align slower weeks this year against last year's strong weeks.
This time, though, we see a more sustained downturn, with sales down in 11 weeks out of the past 17. Clearly, John Lewis is feeling the effects of the decline in high-street activity. However, far from being miserable, John Lewis should be smiling as it picks up share from its rivals. It's a great opportunity to consolidate loyalty as a trusted provider in hard times and carry on with plans to raise margins by extending the availability of own-brand goods. We know advertising can work hard in a recession - the current campaign shows confidence.
The key for any retail brand is to look at the fundamentals - does it have a clear offer, a clear target group and a sustainable advantage that differentiates it? The answer for John Lewis is 'yes' to all three.
- Don't panic. Make doubly sure John Lewis sticks to its knitting - heroic service, informed product editing and the momentum of the store-opening programme.
- JohnLewis.com continues to grow - up 41% this year. Make sure customers know about it, and that those outside the store catchment areas realise they can have John Lewis at home.
- How many people know that insurance and travel company Greenbee is its third brand, selling goods and services not available at Waitrose or John Lewis? Promote it more strongly.
This article was first published on Marketing