Partnership model proves saviour of John Lewis says boss

EMPLOYEE ownership enabled a leading retail group to weather the worst of recession and emerge more robust, its managing director has said.

Andy Street, head of the John Lewis Partnership, said the business model adopted by the organisation had been its saviour.

It also proved helpful in raising finance from the bond markets. Mr Street, also chairman of the Greater Birmingham and Solihull Local Enterprise Partnership, said the partnership had been able to raise finance on favourable terms, largely because investors were confident in its business model.

“It is part of our aim to spread the word about the benefits of employee ownership and promote it as a business model with a proven track record of success, whatever the economic conditions,” Mr Street told a business event in Birmingham.

Mr Street told the event, hosted by law firm Shakespeares at Opus Restaurant, that at the height of recession the partnership’s trading had dropped by 16%.

“After consulting my senior managers at the business, we decided collectively that we would take a no compromise approach on the things that count to our customers – quality, price and service,” he said.

“We had to take some tough decisions at this time, but partners recognised that while this might affect our profitability in the short-term, it was the right decision to protect our business for the future.”

After a strong performance in 2010, largely as a result of its ‘no compromise’ strategy, by March 2011 the business had recovered sufficiently well to reward its partners with a healthy bonus.

Additionally, the partnership – which also includes Waitrose – began to think again about investing in its future. This approach saw the announcement of the new multi-million pound John Lewis store for Birmingham’s New Street Station Gateway development.

Referring to the value of employee ownership during economic downturns, Mr Street said: “Employee ownership is not a softer model than other business models. It can’t afford to be. The ultimate aim of the John Lewis Partnership is the happiness of our partners in a successful business, and to maintain that success we must continue to innovate.

“Our investment in our multi-channel offer has been key to this. As well as our shops, customers can buy from their home computer, their mobile phone or in-store kiosks, and they can collect their order the next day from 120 collection points at John Lewis and Waitrose shops across the UK. As our customers’ shopping habits change, we have to ensure we keep pace with that change.”