How John Lewis is building its own Northern Powerhouse

He lived and died long before the invention of the internet. But had he been around today, John Spedan Lewis would be delighted with his partnership’s success in online retailing.

Artists impressions of how the John Lewis store and Victoria Gate development will look when completed this year.

So says Andy Street, managing director of the eponymous department store group.

“Although he is a 19th, early 20th-century businessperson he is also an incredibly modern person and he would have embraced all the latest thinking,” he adds.

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“What he said in all of his writings is you have got to follow the customer and if the customer wants you to do X then you do X and John Lewis’s story in e-commerce has basically been that.

Andy Street, managing director of John Lewis, on the steps of Leeds Town Hall. Picture Tony Johnson

“We saw the way that customers wanted to change their shopping habits and we have followed. I think he would be delighted.”

John Spedan Lewis, who lived from 1885 to 1963, certainly left his mark on history.

His bold adoption of the co-ownership model turned accepted principles of capitalism on their head. But in spite of the naysayers of the day who were aghast at his pioneering employee-friendly policies, the company he founded has prospered and regularly tops the table for consumer satisfaction, arguably making it Britain’s most-loved retailer.

It is also a financial powerhouse: gross sales rose 9.2 per cent last year to hit £4.43bn, allowing its 93,800 partners to share a bonus worth 11 per cent of their pay. Online sales soared by 21.6 per cent to £1.4bn. The retailer fulfilled more than 6.4m click-and-collect orders over the year – more than 17,500 a day.

Embargoed to 0001 Saturday April 19 Undated handout photo issued by John Lewis ofSpedan Lewis before his death on February 21st 1963. PRESS ASSOCIATION Photo. Issue date: Saturday April 19, 2014. See PA story CONSUMER JohnLewis Timeline. Photo credit should read: John Lewis/PA Wire NOTE TO EDITORS: This handout photo may only be used in for editorial reporting purposes for the contemporaneous illustration of events, things or the people in the image or facts mentioned in the caption. Reuse of the picture may require further permission from the copyright holder.

But for all its successes, John Lewis never made it to Leeds. Until now, that is, with builders hard at work creating a large new store for the city to open in 2016.

Street says the investment is worth £37m. Retail experts calculate it will turn over £50m a year – sound numbers that would surely win an approving nod from the late founder.

Street says: “We are saying it will be a regional flagship shop. The first thing to say is it will be very big. Obviously, that’s implicit in the word ‘flagship’. 250,000 sq ft – that’s considerably bigger than our shop in York or in Sheffield, our two other Yorkshire venues at the moment.

“But then, customers can also expect that it is going to have that mix of traditional John Lewis values, so it will be staffed by a lot of very knowledgeable partners wanting to give good service, which people have always associated with us, but it will also have all of our latest thinking.

“Whenever we open a new shop, it is an opportunity for new concepts to be tested, so that’s from how things look to what products we are actually selling, so it will be the latest of our thinking all brought together in one place.”

The retail market has seen seismic change over the last decade, chiefly through the mass adoption of mobile technology, which has transformed consumer habits and expectations.

Some technologists believe the pace of change today will seem pedestrian compared with what’s coming next, but Street isn’t among them.

He says: “This might be an unimaginative answer but I don’t believe there’s going to be anything of equal significance.

“You occasionally get a once-in-a-generational shift and I think this whole piece about online trade, omnichannel and now as it is becoming mobile as the driver of that and all the smartphone is is the latest way of achieving that.

“That’s the once in a generational change; yes there will be more road to travel but the big step change is in place.”

Street says it is a very exciting time to do business. “Because the market is changing so fast the opportunity to be a winner and the opportunity to be a loser is very stark,” he adds.

“The truth was, up to 2007, with a vibrant economy and a fairly stable retail model the difference between the winners and the losers was not that great. Most people rose on the rising tide.”

Today, though, winner takes all. So who inspires Street?

“Gosh, interesting question. I would have to say Jaguar Land Rover. That might not be a particularly original answer but the way in which that brand has gone from pretty much nowhere to being in British terms world leaders is a phenomenal story.

“Their investment, their recruitment, the way it’s become a design-led company and the proportion of their sales that are reinvested in R&D – it’s a fantastic model.”

He adds that design is a critical component for a department store or indeed any business currently operating.

“And I would be happy to say that when you see our shop here in 12 months’ time or look at our shop in Birmingham that recently opened, there is a real focus on design both in the product and the environment of the shop as well,” he says.

“Customers want to feel inspired by that design. That doesn’t mean it has to be completely outrageous – it has to be absolutely fit for purpose – but it does have to be contemporary and progressive. That’s what they’ve done with their cars as well.”

The new John Lewis store will sit within the forthcoming Victoria Gate development and, according to the marketing material, promises “a new civic building fit for a major European city and a future classic for architecture in Leeds”.

According to developers, the inspiration draws on Leeds’ textile and cloth heritage to create a building with texture and echoes other civic buildings in the city with strong three-dimensional facades.

Street is confident about the impact the department will have on the city. He says: “I don’t think Leeds punches its full weight in terms of retail rankings yet. I think your retail offer is not as good as it could be for a city of this stature. What John Lewis will do is really help Leeds present itself as a regional shopping destination of distinction.

“The evidence from other cities around the country is that when we invest in places, others follow us.”

It is not just about turning up and making a mint from the multitudes of middle-class shoppers who will descend on Victoria Gate once it opens next year.

Street says: “We always talk about doing the right thing. That might not sound particularly inspiring or radical but I think that is a critical watchword. We come here for a long-term relationship. We have traded in Nottingham as John Lewis for over 50 years; we have traded in London for 150 years.

“Look at those cities where we have traded for a long time and you would say there has been a real sense of responsibility and that we thrive with the city that thrives.

“A brilliant example of that is the work we have done in Birmingham to recruit a good proportion of our partners from the ranks of the long-term unemployed.

“We spent a lot of money upfront doing pre-employment training so those people could return to work. Frankly, we could probably have just picked the cream of the retail crop in the city. We could do the same here. But it is actually about a commitment to put something back as well.

“We want to be thought of here as a partner of the city who does act in a responsible way.”