John Lewis warns of high street casualties

Retail bellwether John Lewis warned of "turbulent and challenging" times ahead and predicted there will be casualties on the high street as Britain prepares to leave the EU.

Official opening of the Victoria Gate, John Lewis last October. Picture: James Hardisty.

New managing director Paula Nickolds said that John Lewis is adapting to the challenges and we could see more products being made in the UK to avoid higher import charges following the collapse in sterling after the referendum vote.

Retailers face an unprecedented combination of rising inflation, higher import prices, lower wage growth and Brexit uncertainty at a time when consumers are spending more on eating out and going to the cinema rather than shopping.

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Fashion chain Next warned last week that prices will rise by another 4 per cent this year as a result of the weak pound.

New managing director Paula Nickolds said that John Lewis is adapting to the challenges

Asked whether John Lewis is planning to raise prices, Ms Nickolds said: "It's yet to be clear how much that is passed on. There has been some movement. Apple products have moved ahead.

"Because John Lewis in never knowingly undersold, we will be the last (to move on price)."

John Lewis promises to match rivals if they sell branded goods at a cheaper price, part of its long standing "Never knowingly undersold" guarantee.

Ms Nickolds said that the difficult retail market will be a major challenge over the next year.

New managing director Paula Nickolds said that John Lewis is adapting to the challenges

"I've taken over a business that's in pretty good shape, but I'm taking over at a turbulent and challenging time."

Asked whether some retailers will go bust, she said: "There will be casualties. Of that I'm sure. Returns in retail have got smaller.

"Customers are a bit less confident about their own financial position."

She believes that bringing back production to the UK could help overcome the pound's slump. At the moment 70 per cent of the group's products are imported.

"There has been discussion about repatriation - but the biggest consideration is whether the manufacturing capability exists," she said.

"There may well be the ability to repatriate to the UK. I suspect there will be more capability in the UK over time."

The group said the innovations launched at its new flagship store in Leeds have gone down very well with customers.

Ms Nickolds singled out the Leeds store's new "loved&found" proposition - a collection of more contemporary brands targeted at the more fashion led customer.

"We are pulling together brands we are excited about," said Ms Nickolds.

John Lewis ​has hailed the success of the Leeds store and said it has created a day out experience for shoppers across Yorkshire.

"​Leeds ​is our most experience led store. This year we will open a roof top restaurant that will take advantage of the fantastic views​ of Leeds and make the most of the city's night life," said Ms Nickolds.

​"Our Leeds store is all about creating a destination - a day out experience. That's what department stores were all about. I'm delighted with all the elements of the Leeds store."​

John Lewis Leeds ​is the retailer’s third s​tore in Yorkshire. Representing a £37m investment in Leeds, the 255,000 sq ft site anchor​s​ Hammerson’s Victoria Gate development. The shop feature​s​ more than 350,000 products across fashion, home and technology.

​The store is the retailer’s most service-led shop, offering more than 30 services, such as a beauty spa, a foreign exchange and a home design service.

As times get tougher on the high street, John Lewis is determined to offer customers a unique experience. As part of this, it plans to make 50 per cent of its products own brand or exclusive to John Lewis, up from the current 38 per cent.

"We will increasingly offer people products they can only get at John Lewis," said Ms Nickolds.

Another challenge is the shift to online and the group estimates that 50 per cent of transactions will be online by 2020. With this in mind, it plans to open fewer shops in future and has no plans for new store openings beyond the three already planned for this year.

John Lewis said in January it would axe nearly 400 jobs across its restaurants and home fittings service as it grapples with acute pressures facing the retail sector.