Only the Best Will Do
Paul Coby understands what it takes to deliver consistently great customer experiences. With just over two years logged in the retail trenches, John Lewis’ IT director is a relative newcomer to the world of omni-channel, inventory optimization and price transparency. But Coby, a former British Airways executive, is adept at understanding what matters to today’s customer … and delivering it.
“They expect to be connected anyplace, anytime, anywhere,” he says. “Being connected gives them options and choices and puts them in charge — so that’s the environment we need to provide.”
In the last 24 months, Coby and his team have been overhauling John Lewis’ online business and investing aggressively in logistics, in-store technology and distribution centers. There have been innovative projects related to new store formats, multiple delivery options and plans for international expansion. As this once-traditional department store continues to invest in the future and recreate its retail eco-system, it’s clear that it has fully embraced the digital age.
The proof is in the numbers. Despite a tough year across the European retail scene, overall sales and profits were up for John Lewis Partnership (including 30 John Lewis stores, 9 John Lewis at Home units and 255 Waitrose supermarkets). Gross sales (including VAT) increased 9.3 percent to $14.6 billion and revenue was up 9.1 percent to $13 billion. Operating profit saw a lift of 15 percent to $695 million and same-store sales — known in the U.K. as like-for-like — were up 6.2 percent.
Even more impressive are the numbers from JohnLewis.com. In late April, Planet Retail reported that the company’s online sales exceeded $1.5 billion for the first time on a rolling 52-week basis. In 2012 sales were up more than 40 percent for the online business, which now represents about a quarter of all company-wide revenues.
“John Lewis is currently outperforming its U.K. peers thanks to its bricks-and-clicks initiatives, with a strong multi-channel strategy allowing it to drive customer loyalty and gain market share from competitors across a wide range of categories,” says Lisa Byfield-Green, senior retail analyst at Planet Retail.
Byfield-Green reports that John Lewis’ pace of online growth could outpace that of an international e-commerce giant. “JohnLewis.com is projected to grow 22.8 percent annually over the next five years. Amazon’s growth in the U.K. is estimated at 18.8 percent,” she says. “John Lewis is working from a smaller base, but it’s impressive nonetheless.”
The transformation of the company’s online business is grounded in its Retail Revolution Strategy, outlining the board’s objective to be the U.K.’s leading omni-channel retailer. The blueprint took shape during much of 2011; the company began rolling out initiatives in 2012.
Prior to the change, JohnLewis.com was operating off the platform of Buy.com, a business it acquired in 2000. Executives customized those systems over the years, but it was ill-equipped to support omni-channel ambitions. In February 2012, the company migrated to the ATG Commerce platform, which Coby feels dramatically improves the customer experience by empowering them to shop however they choose — seamlessly across touchpoints and via their favorite devices.
“We needed a strong platform on which we could build and expand our current offering, putting the customer at the center of our operations,” says Coby, noting that the new platform has been a multi-year, $60 million project. He believes the new website incorporates the best of old and new, and that the company is ready to capitalize on the “exceptional growth of mobile and tablet shopping. It’s our job to anticipate trends and respond to customers. The new platform positions us for solid growth in the years ahead.”
John Lewis has taken multiple steps to bring its services closer to customers. “Click and collect” services at John Lewis stores and selected Waitrose branches were rolled out in 2008, enabling shoppers to order online and choose the most convenient place to pick up the order — often the very next day. The service debuted in other Waitrose shops in 2010-2011. Earlier this year John Lewis began a trial with Collect+, a delivery service that will extend the reach of its online delivery to some 5,000 independent retailers.
Aiding and abetting convenient and fast delivery is the retailer’s Magna Park distribution center northwest of London, opened in 2009 and soon to be joined by an adjacent DC. The move is part of the retailer’s plans for improvements in productivity, availability and customer service and will allow John Lewis to fulfill more items direct to customers from its DCs.
“There’s no point in having the [websites] if you don’t have the systems to support it and you don’t have the means to keep your promises to customers,” says Coby. “Omni-channel is about investing in the whole business.”
Without a doubt, e-commerce investments go hand in hand with those in other areas of the business that support and extend the omni-channel strategy. Currently Coby is selecting an enterprise resource planning platform with the intent of standardizing the supply chain. The company has also embarked on an omni-channel customer ordering program by implementing the Sterling order management platform, which will sit behind the online site and provide cross-channel inventory visibility.
“Our philosophy has really been to develop the business, keeping a keen eye on what’s working as we go, rather than investing lots of time and money beforehand,” Coby says. “It was important to us to develop the omni-channel business based on what we were learning over time. Understanding what’s working has led to the big investments we’ve made more recently — and will continue to make — as we look to cement John Lewis’ omni-business.”
Partner in progress
Coby worked closely with Cognizant to re-imagine the business and develop solutions for omni-channel retailing.
“The path to omni-channel requires a consistent, single view of five core things: the customer, product availability, inventory and orders across the enterprise and a unified payment infrastructure,” says Steven Skinner, retail practice vice president with Cognizant Business Consulting. “Without those five things, you cannot present a consistent experience to a customer.” Cognizant helped John Lewis identify those core capabilities, and then determine “the multitude of stepping stones needed to enable them to get where they are today.”
Skinner admits that John Lewis executives had a distinct advantage, namely the ethos of their company. “Creating great experiences for customers is a hallmark of John Lewis and it’s the key characteristic of omni-channel retail.” Still, he insists that what really sets John Lewis apart from its competitors is a commitment to “retail without boundaries.
“Customers don’t really care anymore where they are engaging with a retailer … they’ve been trained that they can engage with John Lewis from their home, while they’re running around Hyde Park or standing in … their local store,” he says. “Their expectation is that John Lewis can bring all of their capabilities to bear to service their desire and provide a full customer experience on the spot.”
Cognizant’s work with John Lewis is ongoing and spans multiple areas: The company performs testing for all the solutions the retailer puts into the marketplace. In addition, Cognizant has worked with John Lewis on the architecture needed to increase the speed of deploying marketplace solutions and support its e-commerce environment.
Cognizant is also directly involved in supporting John Lewis’ order management program. “If you don’t have a distributed customer order management capability to optimize inventory across channels and provide transparency and visibility to customer orders across channels, then you can’t execute an omni-channel world,” Skinner says. “It’s critical.”
Coby insists there’s no mystery to understanding omni-channel shoppers. He describes them as customers who want to see, feel and experience a product before buying online or vice versa; shoppers who want to buy a few styles of the same product and know that they can return what doesn’t work; and consumers who crave the convenience of buying an item online and picking it up somewhere close to home the next day. His objective is to make sure every one of these customers — and all those in between — have the experience they expect at John Lewis.
Integral to that goal is technology that’s been rolled out at the smaller format store that opened recently in Exeter. At 65,000 sq. ft, it’s roughly half the size of the company’s full-line stores.
Inside the store, some kiosks provide wayfinding while others are linked to the website — extending the product assortment far beyond what is stocked in that store. What Coby calls “integration screens” showcase new products and fashion collections. Electronic shelf labeling automatically updates pricing, and screens integrated into display walls provide product information and quick access to online ordering.
“We offer an edited selection of the products shoppers would find in the full-line stores, but in many categories we only provide samples of various patterns or designs,” Coby says. “It provides a great way for our [employees] to add value for customers.”
Wi-Fi technology is also available inside the Exeter store (John Lewis is reported to be the first retailer in the U.K. to offer free Wi-Fi). “People naturally want to be connected, and whether that’s directly to do their shopping or indirectly to take a picture of something and send it to friends on Facebook, they expect Wi-Fi to be available,” Coby says.
He’s not concerned about showrooming; in fact, providing Wi-Fi is viewed as a means of transparency. “One of our core values dating back to 1925 is to be Never Knowingly Undersold,” Coby says. “Shoppers are going to price compare — we recognize that. Our feeling is that when they do they will have the assurance that we offer value for their dollar.”
Next up for John Lewis is international expansion. The company is now selling and shipping items to 33 countries, and Coby has set his sights on delivering the levels of service and trust that the company is known for in the U.K.
“One of the key things we’re avowed to is innovations and trying new things,” says Coby. “Whatever emerges as the next shopping habit, it’s our job to anticipate those trends and act quickly to respond to customer demand.”