Keeping your eye on the prize: what can small retailers learn from John Lewis’s recent expansion?

Last week John Lewis opened two new distribution centres at its Magna Park Campus in Milton Keynes. At a cost of £250million, the 2.4 million square foot site is part of the group’s £500m five-year investment in its online and distribution network.

Although the numbers may mean little to most retailers, there are some important lessons that smaller retailers can learn from what John Lewis is doing. These are five key ideas we could all benefit from.

1. Having a long-term strategy

John Lewis is a very confident business that is highly focussed on one of its key goals – to expand and improve its online offering.

Last year it reported a 21% increase in online sales, with online ordering rising from 4% of total sales to 47% in the last 10 years.

Decisions are being made with a clear idea of what is trying to be achieved. Having a long-term strategy is key to making this happen.

2. Remember expanding isn’t just about expansion

Although expansion is generally a good thing, it has to be underpinned by a clear strategy of how your business can do things better.

In the words of the John Lewis Operations Director Dino Rocos: “This [the new campus] will help customers receive their orders quicker, in fewer parcels, with fewer driving miles and less packaging”.

John Lewis is expanding, but at the same time intends to reduce the number of parcels it sends by 850k per year and to cut 190k from its deliveries. There are very clear cost and efficiency savings in play here – it’s not about expansion for expansion’s sake.

3. Invest when times are good

John Lewis, through its unique corporate structure, is a business that is not afraid to invest heavily in its future. Businesses that look ahead and make changes when things are going well are likely to avoid the many dangers of making rushed and ill-informed decisions when things are going badly, cash flow is tight and stakeholders (especially the bank) are demanding action.

4. Stay true to company values

As transactions move from store to online, JL is keen to ensure that the experience of customers is not affected. To quote Rocos again: “Our customers expect the JL experience at every stage of the purchase”.

Decisions that are centred on the underlying values and culture of the business are generally the right ones to make.

5. Be small, think big

Smaller retail businesses that think and act like larger retailers have, in my experience, a far better chance of success.

So, to summarise, if you think ahead, adapt to change, invest when times are good, stay true to your values and – most importantly – make informed decisions backed up by the numbers, you too can thrive in the ever-changing landscape that is retail.

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