What the Impressive John Lewis Half-Term Trading Week Really Shows
During John Lewis half-term trading the company accomplished £82.2m in sales or an 11.5 percent increase in contrast with the previous year. While the rise is believed to be due to a half-term week increase in football, the increase had fallen about a week or so later than it happened back in 2015. John Lewis three product categories were reported to have had a sales increase relatively strong, where EHT stood out as the best performer with a 17.1 percent.
Home products sales were solid as well with 7.7 percent in the week, even as items in various categories like Textiles and Gifting performed rather well. In the area of Haberdashery the week was also strong as sewing machines sales, for instance, went up by 21 percent in contrast with 2015 courtesy of the Great British Sewing Bee aired on BBC 2.
The warmer weather didn't go unnoticed and many embraced it, which was reflected by a 45.4 percent increase in sales within the outdoor living section.
The ‘Old Man on the Moon’ effect
Of course the half-term weekly trading sales didn't tell the whole story. Over the years, brands have had to go that extra mile to reach as many online shoppers as possible and John Lewis is not an exception. One of the high profile adverts used for this cause was from John Lewis, dubbed the “Man on the Moon”. It was a success having accomplished its intended purpose as shoppers surged through their website; Christmas sales went up by 5.1% in contrast with the previous year.
The video is about 2 minutes and cost about £1 million to make with an extra £6 million used to book slots on TV. It featured a girl, about six years of age seeking to relay a message to an old lonely “Man on the Moon”. The money was well spent considering the outcome of the ad as John Lewis Christmas sales in 2015 were rejuvenated, trouncing the 2014 production with an additional 23,000 mentions on social media within its first 120 minutes of life. The mentions contrasted heavily with those of “Monty the Penguin”, which stood at 14,000 within the first day or 24 hours of life during the same period.
In store performance wasn’t very impressive but somehow not really hard-hitting since the department store was able to amass £951 million in total sales during the critical Black Friday as well as in post-Christmas and Christmas trading period.
Reliance in web customers
John Lewis heavily relied on web based sales that stood at 21.4% even as in store sales dipped by 1.2%. Its partnership with Waitrose, a middle class favourite didn't go unchallenged as trading fell by 1.4% in terms of sales within six weeks.
Together with Waitrose, John Lewis group combined sales increased by 4.1% to about £1.81 billion within six weeks that ended after Christmas. The company had indicated that high street shoppers had dipped in 2015 as most consumers continued warming up to online purchases. In fact, the company's trading via its website made up 40% of its entire sales within that period.
The strong trading Christmas period was noteworthy for the John Lewis Partnership, irrespective of the significant shifts taking place in the non-food market in terms of trading patterns and the challenges afflicting the grocery market. The partnership expected yearly profits had remained the same at £270-£320 million in contrast to the previous year's £342.7 million.
One of the significant things about John Lewis is its ability to embrace change and outperform rivals. The company has done so for six years, with a robust online offering the main reason, including modern stores and an emphasis on England's South East, which is more prosperous. As a result, sales in Tablets and Smartphones have increased by about a third, with most shoppers increasingly falling in love with click and collect services that registered an increase of 16% over the previous year’s. Currently, the click and collect service by John Lewis make up about half of the entire company's orders.
At the same time, about 35% of the web based orders by John Lewis were being collected from the various branches of its partner, Waitrose. The department store sales story did not end there though. At the same period the store had an increase in sales of about 5.1% in the area of home products as fashion and technology saw an increase of 6.1% and 9.6% consecutively. According to the store management, its performance in fashion would have been much higher had the weather been fairer.
Low prices expected to boost sales further
Overall, prices in shops had deflated by 2% by December 2015 from 2.1% in November as indicated by the Shop Price Index from BRC-Nielsen. The falling of prices will probably play in the hands of John Lewis. Retailers are projected to continue their investment in price and offering low prices on diverse commodities. Coupled with intense competition that defines the industry, prices might continue falling within the medium term. Perhaps this was the reason for the £82.2 million half-week trading display by the group.
As food saw a deflation of 0.3% annually, which remained the same in contrast with the rate of November 2015, deflation on non-foods decreased to about 3% from about 3.3% registered in November. This was driven mostly by diverse reductions in various areas from hardware, gardening, and DIY, electrical, footwear to clothing prices. Other commodities within the retail section of the supply chain had fallen dramatically such as oil, with the impact expected to continue across all prices at the store for a period of time.
According to BRC-Nielsen the deflation levels of 2015 across the whole retail industry were expected to continue at least in the first six months of 2016. As such, the £82.2m sales increase is significant from this perspective, which perhaps tells the story of the rest of the second half of 2016.
Apparently, non-food retailers such as furniture buyers were and still expected to continue using cuts in prices and making the most of targeted promotions in 2016.