John Lewis SWOT and PESTLE Analysis

Strength

1. Robust growth Strategy Robust growth Strategy: John Lewis has been a consistent performer in terms of revenue with operating income in 10 billion Pounds in FY 2017. The reported growth over 2016 is 2.8%. The sales growth was noted without including partnership bonus and other exceptional items. There was an increase in market share for both Waitrose and John Lewis segments. In addition, in spite incremental costs of omni-channel retailing in John Lewis and investments in pay, operating profit performance was observed to be decent enough. The company’s profit grew to 370 million pounds which compared to last year was up by 21.2%. The profit growth was driven primarily by a decrease in pension accounting charges. However, if charges for pensions and long leave are excluded the profit before Partnership Bonus, tax and exceptional items grew by 1.9%. Product innovation, great Partner service and competitive pricing have been some of the key factors of John Lewis’ strategy which has grown their customer base, increasing the market share. Apart from this the company has a strong focus on fostering partner growth and achieving financial sustainability.destinations between UK and the US, accounting for 35% share of the total UK-US capacity.

2. Strong Online presence: John Lewis overall global presence and reputation across various countries has led to its brand development over the years. John Lewis is also a major player when it comes to finance and home care. The company is well recognized in the United Kingdom as a result of its continuous endeavour of establishing customer relationship and fostering partnership growth. The main brand values for the company lie along the lines of performance, growth and innovation. The company further invests to strengthen its brand portfolio through innovative new products. The company brands are diversified across different segments based on applications; for example, the retail offerings like home furnishings to services like beauticians. The overall net promoter score for both John Lewis Store as well as Waitrose stores have remained constant over the year however there has been an increase in best customers.

3. High brand strength: John Lewis overall global presence and reputation across various countries has led to its brand development over the years. John Lewis is also a major player when it comes to finance and home care. The company is well recognized in the United Kingdom as a result of its continuous endeavour of establishing customer relationship and fostering partnership growth. The main brand values for the company lie along the lines of performance, growth and innovation. The company further invests to strengthen its brand portfolio through innovative new products. The company brands are diversified across different segments based on applications; for example, the retail offerings like home furnishings to services like beauticians. The overall net promoter score for both John Lewis Store as well as Waitrose stores have remained constant over the year however there has been an increase in best customers.

4. Focus on Innovation and creativity: John Lewis has always kept themselves at par with the market needs and developed their product and services offerings over the years across different segments. The company has always focused on product innovation as its key strategy. The strong focus on innovation has improved the product portfolio and customer engagement for the company. Further the company has laid its focus on innovation in its strategy, like focus on digitisation and omni-channel marketing and sales. The company aims to digitize its customer shopping experience by offering an integrated platform. As a part of improving the customer service, the Company introduced new features to propel the Partnership Card usage become more convenient. Another such instance is the QuickCheck App which allows myWaitrose customers to scan barcodes on their smartphones as they place products in their basket

Weakness

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Opportunity

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Threat

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Political

Economical

">1. Impact of economic fluctuations: The increased political and economic certainty in UK has caused sharp fluctuations in the currency market. John Lewis is present across various geographies in UK which makes them exposed to variations in currency. UK retailers selling to the EU will still have to conform to EU standards and wider trade policies and regulations. Unless the UK retailers come with an agreement with EU trading countries the UK retailers will be impacted by UK’s loss of influence on EU policy, standards and regulation setting. As a result of the exit of UK from EU there has been creation of differences in UK-EU policies/ standards. This could increase compliance costs and product lead times for UK retailers thus making them less competitive. Majority of UK retailers import from EU Member States and other countries who have trade agreements with the EU. Hence for prices of UK retailers’ goods/services to remain competitive, the UK should seek agreements with non-EU countries.

">2. Increasing fixed costs: There is a continuous change in economic conditions across UK as a result of Brexit where the group operates. The consumer spending, increasing prices and increasing competition is having a strong impact on the industry as a whole. The group is on a strategic growth path by identifying consumer behaviors and adopting its sales strategy accordingly. Purchase power, consumer dynamics are some of the factors which may change as per the change in economic policies of the country. For example, John Lewis operations depend a lot on labor force and employees. Any change in the economic conditions will lead to change in the direct labor costs thus affecting the operations and business of the organization.UK retail sector is highly dependent on EU migrant workforce, even the logistics and supply chain particularly dependent on migrant labor. Thus, the retailers who employ UK nationals to fill positions to guarantee continued operation could lead to increased labor costs

3. Uncertainty in import and export duties: More than two-thirds of the UK GDP is owed to consumer spending and is therefore the most important driver of UK economic growth. Strong consumer spending growth has played a central role in the recovery of the UK economy since 2012. But in 2017 the growth is slowing down as real incomes were squeezing. As per an independent research by analyst at least 20% of retail space will need to close in future as costs including business rates and wages, rise while sales in physical stores continue to fall. At the end of 2017 Consumers were already tightening by bringing most of their Christmas shopping forward to Black Friday to make the most of the sales discounts. However, in 2018 it looks like they’ve started in cautious mood with subdued spending. As per the data company HIS Markit, High street retailers have fared worst with face to face dropping 5.4 per cent year-on-year in April, while e-commerce going down by just 0.1 per cent. The firm also confirms that there is a structural shift from in-store sales to online shopping in the retail sector.

Social

Technological

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Legal

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Environmental

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