New Case Study on John Lewis Partnership Presented by MarketLine20 Aug 2012 • by Natalie Aster
John Lewis Partnership is one of the UK's most well-known and successful retail chains. Whereas most retailers of its scale are owned by shareholders, John Lewis Partnership is owned by its employees. This case study examines the ways in which this unusual form of ownership has fostered its successful performance.
During the period FY2003-2011, JLP has demonstrated year on year growth in sales. This showed little change even during the UK economic downturn of 2008 and 2009. Compound annual growth rate (CAGR) in revenue was 7.4% for this period.
According to the report “John Lewis Partnership Case Study: UK retail chain is owned by its employees” by MarketLine, for the FY2003-2011 period, Waitrose saw 9.4% revenue CAGR, while John Lewis saw 4.4% revenue CAGR. In comparison, the UK's leading food retailers (Tesco, Sainsbury's, Asda, and Morrisons) had revenue CAGRs ranging from 2.7% to 18.4%. Leading department stores such as Debenhams and Marks & Spencers had lower revenue CAGRs than John Lewis, although financials for some of its key competitors were unavailable for comparison.
John Lewis Partnership Case Study: UK retail chain is owned by its employees
Published: February, 2012
Price: US$ 400,00
In comparison, the four leading food retailers had net income CAGRs of 4.4% - 16.7% during the FY2003-2011 period. Department store competitors, where data was available, posted net income CAGRs of -1.4% to 29.7%.
The performance of JLP in terms of revenue and profitability is thus quite typical of its competitors, large-scale companies operating in the food retail and department store sectors. However, it differs from them in its mode of ownership.
- Financials for the past ten years show JLP performing strongly, even in difficult market conditions
- John Lewis Partnership is owned by its employees via a trust. This is reflected in the structures in place for workplace democracy, and in the annual profit-share bonus given to all employees
- Company strategy focuses on long-term planning, brand strength, and employee partnership.
- Without the need to satisfy shareholders, the company is able to maintain long-term plans even if this temporarily affects profitability.
- Staff loyalty, as reflected in turnover rates, is better than average for the UK retail sector.
- The company has a strong brand, based on quality, service, value, and partnership. This permits it to maintain sales, even when competitors offer cheaper alternatives.
- However, price competition is an issue, particularly in the UK's concentrated food retail sector. JLP is responding with strategies such as Essential Waitrose, which attempts to offer lower-priced basic foods without compromising the Waitrose brand identity.
More information can be found in the report “John Lewis Partnership Case Study: UK retail chain is owned by its employees” by MarketLine.
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