How UK retailer John Lewis is adapting to the era of hyperconnectivity by merging digital and offline channels.

1. 1 © The Economist Intelligence Unit Limited 2015
How UK retailer John Lewis is adapting to the era of
hyperconnectivity by merging digital and offline channels
Department stores, relying on selling a wide variety of goods in a single shop, seem an old-
fashioned idea these days: after all, shoppers can find a wider variety of goods online, often
for a lower price. In the US, this has forced store closures among household names such as JCPenney
and Macy’s. More broadly, retailers from the video rental company Blockbuster to bookstores such
as Borders have wilted under the online assault.
But the UK department store chain John Lewis has thrived in the face of a sometimes difficult market,
embracing the Internet and other technologies such as smartphones as they emerge and using them to
complement its surprisingly small number (31) of stores.
“Customers increasingly want their shopping experiences to fit around their lifestyle,” says John
Lewis’s online director Mark Lewis, “rather than having to fit their lifestyle around their shopping.”
This has prompted John Lewis to tie together its various retail channels, from online to in-store and
telephone shopping, so that the customer can shop the same way regardless of time and location.
In 2012 John Lewis publicly announced the significance of this omnichannel strategy, but it had,
in fact, been working towards this for some years. It was one of the first retailers to introduce click-
and-collect services back in 2009, for example, and subsequently rejigged its store accounting so
that results included an element of online sales, thereby ensuring that the site did not cannibalise
individual shops’ results. That also meant that shop staff had an incentive to encourage online as well
SPONSORED BY
CHANGING
An article from the Economist Intelligence Unit
CHANNELS

2. 2 © The Economist Intelligence Unit Limited 2015
as in-store sales—and of course it opened the door to them offering customers a wider range of goods
than could be stocked in any individual physical shop.
The strategy is still unfolding, and the firm has only recently started to arm sales staff at two of its
flagship stores with iPads so that they can use the site for in-store customers. The stores remain the
core part of the offering, involved in 85% of customer purchases. However, online now accounts for
one-third of sales (compared with 50% for in-store). More importantly, around two-thirds of purchases
involve the use of a variety of devices.
John Lewis figures show that 23% of sales are researched online, for example, before being bought in
a shop. By contrast, just 12% are researched in a shop before being bought online—typically pricier
items such as sofas, which people like to see before they buy. Only a relatively small proportion—14%—
are both researched and bought online in what John Lewis calls “a quick fashion fix”, when people
rush to buy a new shirt or something similar. Around half of all items are still researched and bought
exclusively in store.
“We know that customer journeys vary—some begin their journey in-store and finish it online and
vice versa,” says Mr Lewis. “Whether they are using their phones or tablets in-store, on the sofa or on
the train on the way to work, their experience needs to be seamless and the content and information
easy to access. The key is recognising what each device is best for and then tailoring the customer
experience to that device.”
He says that the biggest shift of the past 18 months has been the rise of mobile. “Today, over 50% of
web traffic comes from mobile phones and tablets … Mobile is becoming the glue between the shop
and online.” John Lewis has started to introduce signage in its stores to tell people how they can
use the mobile app to scan and compare products, for example. It is also trialling the use of beacon
technology to tell click-and-collect customers that their goods are ready to be picked up when they are
close to the store. And some marketing material, such as its “Monty the Penguin” Christmas campaign
and Edition magazines (containing tips on everything from fashion to home furnishings), are being
shared across all platforms so that customers have the same John Lewis experience however they shop.
The company is also using the wealth of data now available from the various connected devices to
review, for example, how people are using their mobiles in-store to look for out-of-stock products and
how their online behaviour varies when inside or outside a shop.
But “safeguarding our customers’ privacy and data is extremely important to us,” says Mr Lewis. John
Lewis knows that it must use the new connectedness to work more closely with customers, without
alienating them by being perceived as intrusive.
Hyperconnected organisations