Robust sales for Waitrose and John Lewis

In the half year, Waitrose saw sales rise by 7.8 per cent while John Lewis sales rose by 6.6 per cent.

A very robust set of results from the Partnership are tempered only by the fact profit, on a before tax basis, was down some £42.9m to £68.5m; something that will, ultimately, impact on next year’s bonus pot. However, given that this fall was the result of exceptional items (mostly an adjustment due to changes in holiday pay policy), while disappointing it is not indicative of the underlying performance of the business. Indeed, when exceptional items are stripped out, the Partnership’s profit increased by 3.9 per cent or £4.4m.

Profit aside, the sales numbers clearly demonstrate that despite its good run of growth, the Partnership remains firmly on the front foot with both sides of its business notching up very strong performances.

In our view, the biggest single weapon in the Partnership’s armoury remains its ability to take a long term view of the market and invest appropriately in areas that it sees as delivering future value. This is certainly a function of the freedom which comes from being an employee owned, rather than a public, company. It is also, however, down to the culture and attitude of the business and its management which have, over the past 5 or so years, injected a real sense of pace and purpose throughout the organisation.

John Lewis

Off the back of a strong set of comparatives John Lewis has maintained its momentum and confirmed that it remains one of the success stories of British retail. While recent years have seen sales propelled by a strong programme of new store openings, the latest like-for-like figures – which significantly outstrip those of total UK retail – underline the fact that investments in stores, systems and assortments are all helping to drive growth across the business.

Despite its performance, John Lewis remains paranoid about becoming complacent which has helped to foster culture of energetic self-appraisal and reinvention. This, in a market which is rapidly shifting and reshaping, is one of the keys to its continued success. Indeed, it would not be unreasonable to say that John Lewis is firmly in the vanguard of innovative and forward thinking retailers.

The practical implication of all this is that, to consumers, the offer, service and proposition are perhaps more relevant today than they have ever been. For example, in fashion John Lewis has been quick to respond to the flight to quality with brands such as Alice Temperly and John Lewis & Co – both of which have a strong appeal to clearly defined target audiences. Equally, John Lewis has been responsive to the greater demand for personalisation and customisation in home products with its "bespoke" upholstery service. Innovation also extends to online where, as well as an extensive overhaul to the website, new delivery options such as Collect Plus have been trialled.

If innovation is important, it is nothing without proper execution. This is another area in which John Lewis arguably excels. Although the company has a lot on its agenda, it usually takes the time to think changes through and ensure they are properly delivered. The upshot is that the vast majority of the developments it puts in place deliver good returns.

Current and past success is all well and good; however, maintaining this for the future is what really counts. On this front, we hold with our view that John Lewis will significantly outperform the market over the medium term. A new pipeline of stores, further range innovation, continued investment in the website and fulfilment, and strong marketing campaigns will all underpin future growth. It is also true that despite the fact the business is now much larger than it was 5 years ago it still has massive headroom for growth in terms of both new customer acquisition and geographical expansion.

Waitrose

In a flat grocery market Waitrose put in a stellar performance with significant advancements in both total and like-for-like sales. This comes off the back of a long period of market outperformance, over which time the grocer has successfully grown its market share against the backdrop of a very tough, competitive trading environment.

Particularly pleasing is the success of the online operation, where sales were up by 40.6%. This is the result of both strong marketing and investment in fulfilment capacity to increase slot availability for consumers.

Innovation remains at the heart of Waitrose’s success. On the food front this manifested itself in the redevelopment of the Menu range, an enhancement and extension of home-baking products, and extending the premium Heston range of products to new categories. Outside of food Waitrose has also been proactive in seeking out new sales opportunities, such as in gardening where it developed a new horticulture range designed to appeal to its largely green-fingered customer base. In a market where food volume growth will remain sluggish, indentifying such incremental sales opportunities has become increasingly important and is something that will deliver growth for Waitrose over the longer term.

Store investment and enhancement will also help drive sales over the medium term and is also important in terms of allowing Waitrose to maintain its service differentiation. In this regard the new service desks the company is introducing will help improve service standards for click-and-collect shoppers as well as underlining many of the (often previously ‘hidden’) added-value service Waitrose offers, such as flower wrapping and the loan of glasses or fish kettles.

Although the grocery market will remain challenged in terms of volume growth, our view is that Waitrose will continue to build share. A combination of new store openings, a continued commitment to value, the growth of convenience and online, and some conservative expansion of the non-food offer will all underpin this success.

Photograph: Getty Images

 Managing Director of Conlumino

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Expressions of sympathy for terror's victims may seem banal, but it's better than the alternative

Angry calls for "something to be done" play into terrorists' hands.

No sooner had we heard of the dreadful Manchester Arena bombing and before either the identity of the bomber or the number of dead were known, cries of “something must be done” echoed across social media and the airwaves. Katie Hopkins, the Mail Online columnist, called for “a final solution”, a tweet that was rapidly deleted, presumably after she remembered (or somebody explained to her) its connotations. The Telegraph columnist Allison Pearson wanted “a State of Emergency as France has” and “internment of thousands of terror suspects”, apparently unaware that the Nice attack, killing 86, happened after that emergency was declared and that nobody has been interned anyway.

It cannot be said too often that such responses play into terrorists’ hands, particularly if Isis was behind the Manchester bombing. The group’s aim is to convince Muslims in the West that they and their families cannot live in peace with the in-fidel and will be safe only if they join the group in establishing a caliphate. Journalists, striving for effect, often want to go beyond ­banal expressions of sympathy for ­victims. (It’s a mistake I, too, have sometimes made.) But occasionally the banal is the appropriate response.

Pity begins at home

Mark Twain, writing about the “terror” that followed the French Revolution and brought “the horror of swift death”, observed that there was another, older and more widespread, terror that brought “lifelong death from hunger, cold, insult, cruelty and heartbreak”. The first, he wrote, we had been “diligently taught to shiver and mourn over”; the other we had never learned to see “in its vastness or pity as it deserves”.

That is true: more children across the world die each day from hunger or disease than could ever be killed in a terror attack. We should not forget them. Nor should we forget that the numbers killed in terrorist attacks in, for example, Baghdad far outnumber those killed in all European attacks of our times combined. In an age of globalisation, we should be more cosmopolitan in our sympathies but the immediacy of 24-hour news make us less so.

When all is said and done, however, pity, like charity, begins at home. We naturally grieve most over those with whom we share a country and a way of life. Most of us have been to concerts and some readers will have been to one at the Manchester Arena. We or our children could have been present.

Cheers from Highgate Cemetery

What a shame that Theresa May modified the Tory manifesto’s proposals on social care. For a few giddy days, she was proposing the most steeply progressive (or confiscatory, as the Tories would normally say) tax in history. True, it was only for those unfortunate enough to suffer conditions such as dementia, but the principle is what counts. It would have started at zero for those with assets of less than £100,000, 20 per cent for those with £120,000, 50 per cent for those worth £200,000, 99 per cent with those with £10m and so on, ad infinitum. Karl Marx would have been cheering from Highgate Cemetery.

Given that most people’s main asset – the value of their home – did not have to be sold to meet their care costs until death, this was in effect an inheritance tax. It had tantalising implications: to secure their inheritance, children of the rich would have had to care for their parents, possibly sacrificing careers and risking downward mobility, while the children of the poor could have dedicated themselves to seeking upward mobility.

The Tories historically favour, in John Major’s words, wealth cascading down the generations. In recent years they have all but abolished inheritance tax. Now they have unwittingly (or perhaps wittingly, who knows?) conceded that what they previously branded a “death tax” has some legitimacy. Labour, which proposes a National Care Service but optimistically expects “cross-party consensus” on how to finance it, should now offer the clarity about old age that many voters crave. Inheritance tax should be earmarked for the care service, which would be free at the point of use, and it should be levied on all estates worth (say) £100,000 at progressive rates (not rising above even 50 per cent, never mind 99 per cent) that yield sufficient money to fund it adequately.

Paul Dacre’s new darling

Paul Dacre, the Daily Mail editor, is in love again. “At last, a PM not afraid to be honest with you,” proclaimed the paper’s front page on Theresa May’s manifesto. Though the Mail has previously argued that to make old people use housing wealth to fund care is comparable to the slaughter of the first-born, an editorial said that her honesty was exemplified by the social care proposals.

On the morning of the very day that May U-turned, the Mail columnist Dominic Lawson offered a convoluted defence of the failure to cap what people might pay. Next day, with a cap announced, the Mail hailed “a PM who’s listening”.

Dacre was previously in love with Gordon Brown, though not to the extent of recommending a vote for him. What do Brown and May have in common? Patriotism, moral values, awkward social manners, lack of metropolitan glitz and, perhaps above all, no evident sense of humour. Those are the qualities that win Paul Dacre’s heart.

Sobering up

Much excitement in the Wilby household about opinion polls that show Labour reducing the Tories’ enormous lead to, according to YouGov, “only” 9 percentage points. I find myself babbling about ­“Labour’s lead”. “What are you talking about?” my wife asks. When I come to my senses, I realise that my pleasure at the prospect, after seven years of Tory austerity, of limiting the Tories’ majority to 46 – more than Margaret Thatcher got in 1979 – is a measure of my sadly diminished expectations. l

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 25 May 2017 issue of the New Statesman, Why Islamic State targets Britain

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