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

Photo: Getty
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The Liverpool protest was about finding a place for local support in a global game

Fans of other clubs should learn from Anfield's collective action.

One of the oldest songs associated with Liverpool Football Club is Poor Scouser Tommy, a characteristically emotional tale about a Liverpool fan whose last words as he lies dying on a WWII battlefield are an exhalation of pride in his football team.

In November 2014, at the start of a game against Stoke City, Liverpool fans unfurled a banner across the front of the Kop stand, daubed with the first line of that song: “Let me tell you a story of a poor boy”. But the poor boy wasn’t Tommy this time; it was any one of the fans holding the banner – a reference to escalating ticket prices at Anfield. The average matchday ticket in 1990 cost £4. Now a general admission ticket can cost as much as £59.

Last Saturday’s protest was more forthright. Liverpool had announced a new pricing structure from next season, which was to raise the price of the most expensive ticket to £77. Furious Liverpool fans said this represented a tipping point. So, in the 77th minute of Saturday’s match with Sunderland, an estimated 15,000 of the 44,000 fans present walked out. As they walked out, they chanted at the club’s owners: “You greedy bastards, enough is enough”.

The protest was triggered by the proposed price increase for next season, but the context stretches back over 20 years. In 1992, the top 22 clubs from the 92-club Football League broke away, establishing commercial independence. This enabled English football’s elite clubs to sign their own lucrative deal licensing television rights to Rupert Murdoch’s struggling satellite broadcaster, Sky.

The original TV deal gave the Premier League £191 million over five years. Last year, Sky and BT agreed to pay a combined total of £5.14 billion for just three more years of domestic coverage. The league is also televised in 212 territories worldwide, with a total audience of 4.7 billion. English football, not so long ago a pariah sport in polite society, is now a globalised mega-industry. Fanbases are enormous: Liverpool may only crowd 45,000 fans into its stadium on matchday, but it boasts nearly 600 million fans across the globe.

The matchgoing football fan has benefited from much of this boom. Higher revenues have meant that English teams have played host to many of the best players from all over the world. But the transformation of local institutions with geographic support into global commercial powerhouses with dizzying arrays of sponsorship partners (Manchester United has an ‘Official Global Noodle Partner’) has encouraged clubs to hike up prices for stadium admission as revenues have increased.

Many hoped that the scale of the most recent television deal would offer propitious circumstances for clubs to reduce prices for general admission to the stadium while only sacrificing a negligible portion of their overall revenues. Over a 13-month consultation period on the new ticket prices, supporter representatives put this case to Liverpool’s executives. They were ignored.

Ignored until Saturday, that is. Liverpool’s owners, a Boston-based consortium who have generally been popular on Merseyside after they won a legal battle to prize the club from its previous American owners, backed down last night in supplicatory language: they apologised for the “distress” caused by the new pricing plan, and extolled the “unique and sacred relationship between Liverpool Football Club and its supporters”.

The conflict in Liverpool between fans and club administrators has ended, at least for now, but the wail of discontent at Anfield last week was not just about prices. It was another symptom of the broader struggle to find a place for the local fan base in a globalised mega-industry.The lazy canard that football has become a business is only half-true. For the oligarchs and financiers who buy and sell top clubs, football is clearly business. But an ordinary business has free and rational consumers. Football fans are anything but rational. Once the romantic bond between fan and team has been forged, it does not vanish. If the prices rise too high, a Liverpool fan does not decide to support Everton instead.

Yet the success of the protest shows that fans retain some power. Football’s metamorphosis from a game to be played into a product to be sold is irreversible, but the fans are part of that product. When English football enthusiasts wake in the small hours in Melbourne to watch a match, part of the package on their screen is a stadium full of raucous supporters. And anyone who has ever met someone on another continent who has never travelled to the UK but is a diehard supporter of their team knows that fans in other countries see themselves as an extension of the local support, not its replacement.

English football fans should harness what power they have remaining and unite to secure a better deal for match goers. When Liverpool fans walked out on Saturday, too many supporters of other teams took it as an opportunity for partisan mockery. In football, collective action works not just on the pitch but off it too. Liverpool fans have realised that. Football fandom as a whole should take a leaf out of their book.