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8 January 2020

From the Treasury to the high street: can Sharon White save John Lewis?

As an outsider, the former director-general for public spending may be better placed to make significant changes to the chain of department stores.

By Will Dunn

The department store has been the totemic institution of the aspirant British middle class since the 19th century. A century of recreational shopping put one on every high street, from Bodgers of Ilford to Pendleburys of Wigan, Curl Brothers of Norwich to John Polglase of Penzance. These independent stores gradually coalesced into chains during the 20th century, as larger businesses such as Debenhams, House of Fraser and John Lewis bought smaller stores and defined the British high street.

Between them, these three chains continue to employ more than 75,000 people. But they are now teetering. Trapped between the spiralling cost of property and aggressive competition from online retailers, they have become emblems of the high street’s rapid decline.

Sharon White – one of the most widely admired civil servants in the UK, the former chief executive of Ofcom and second permanent secretary at the Treasury – is moving into this precarious sector, taking over as the new chair of the John Lewis Partnership in February 2020. Why?

Perhaps, for White – who is 52 – part of the attraction lies in the opportunity to become the first black woman to take on this high-profile position. The daughter of Jamaican immigrants, White studied economics at Cambridge University and University College London before working at the Treasury, the British embassy in Washington, and the No 10 policy unit during the premiership of Tony Blair.

She returned to the Treasury as director-general for public spending in 2012, where she conducted a review of the department’s response to the financial crisis of 2008.

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In 2013 she became the first black person (and the second woman) to be appointed as the Treasury’s second permanent secretary, one of the most senior roles in the civil service. As the chief executive of Ofcom and the chair of John Lewis, she has stepped into roles that had previously been held exclusively by white men.  

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While White’s glittering CV contains no experience of working on the high street, she is not the first civil servant to take over at John Lewis: Stuart Hampson, who ran the business from 1993 to 2007, spent more than a decade on Whitehall. Perhaps more than any other private business, John Lewis is an institution, so much a part of British society that it may as well be owned by the nation. This is largely due to its structure.

In 1920, John Spedan Lewis introduced the first profit-sharing scheme at the Peter Jones department store in Sloane Square in central London. As director, Lewis had already begun what he called an “experiment in industrial democracy”, introducing shorter working days, paid holiday and other innovations that seemed to his father – John Lewis, who ran his own store on Oxford Street – contrary to good business. But the 34-year-old was vindicated as his staff, who were now personally invested in the store’s performance, turned a struggling business into a highly profitable success. He went on to hand full control of the business to his employees.

Some worry that it is not White’s lack of experience in retail that matters, but her unfamiliarity with the specific culture of an employee-owned partnership. One head of a large retail chain told me that there are significant disadvantages to “a lack of intimacy” with “the culture and the people”.

However, the fact White is an outsider may give her power to make significant changes to John Lewis. In 1925, John Spedan Lewis introduced the “never knowingly undersold” policy, which guarantees that if a shopper can find the same product for less elsewhere on the high street, John Lewis will refund the difference. While the policy does not apply to online retailers, the savage discounting now being implemented by more troubled rivals – Debenhams has announced the closure of 19 branches – makes this policy more expensive for John Lewis than ever before. If it is to be scrapped, a newcomer such as White may be the only person who can do so.

There is no doubt that White faces a difficult job. In October John Lewis sought discounts from its landlords, citing excessive service charges, while cutting 75 management roles. Meanwhile, Waitrose, which belongs to the John Lewis partnership, closed seven branches last year owing to competition from cheaper rivals such as Aldi and Lidl.

The partnership has been forced to put an end to its final-salary pension scheme, and last year’s staff bonus – which has in previous years hit 24 per cent – dropped to just 3 per cent, its lowest level since 1953. In 2019, the partnership’s operating profit fell 45 per cent from the previous year.

Nonetheless, John Lewis is in a much better place financially than its rivals, and last year’s slump is partly attributable to a major investment in infrastructure. But its biggest asset may yet be its principles. Several large-scale studies have found that purchasing decisions are increasingly influenced by the social and environmental responsibility of the company selling the product. This is especially true of millennials, the largest and highest-spending consumer group. With 83,900 partners and, in White, a chair who could not be more different from Philip Green or Mike Ashley, John Lewis may yet be the future of British shopping.

This article appears in the 08 Jan 2020 issue of the New Statesman, Trump vs Iran