John Lewis Builds on Trust to Break out as Advertiser

Historically Modest in Marketing, Beloved British Retailer Grows Sales During Downturn by Tapping Into Consumer Emotion and Tradition

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A dose of desirability: John Lewis hired London hotshop Adam & Eve to add desirability in ads.
A dose of desirability: John Lewis hired London hotshop Adam & Eve to add desirability in ads.

When Prince William and the new Princess Catherine took to the dance floor at their Buckingham Palace wedding reception, the royal bride and groom performed their first dance as a married couple to the soundtrack from a John Lewis department store ad -- Ellie Goulding's version of Elton John's "Your Song," originally recorded for the retailer's Christmas 2010 commercial.

A year earlier, when heavy snow gridlocked roads and railways around the town of High Wycombe, the local branch of John Lewis sheltered more than 100 stranded staff and customers, inviting them to spend the night in the bed department, providing food and drink, as well as toys for the children.

Yes, it sounds crazy, the notion that a department store can have an emotional grip on the hearts of the British people, but increasingly in the U.K., that 's the story of John Lewis.

While other retailers have been struggling through the recession, John Lewis' sales are booming. Christmas 2010 was the best holiday period in the company's history, and its January 2011 sales figures were also the best on record. It doesn't hurt that , in an era of perceived widespread greed, the 30-store chain is owned by its employees, and the CEO's salary is famously capped at a multiple of the earnings of the lowest-paid staffer. Plus , it finally got its commercial act together after ambling along for a century.

"We've only had a marketing department for seven or eight years," said Craig Inglis, who was promoted to the newly created role of director-marketing in February of last year. "Our tradition is to be modest and non-boastful -- to believe that if the product is right, people will come."

In February 2009, Mr. Inglis hired independent London hotshop Adam & Eve, with a brief to inject desirability into the brand to complement the trust and respect that the store already inspired. "There is a thread of steel going through our work, a common language that is emotional and inspiring," he said. "We are not necessarily shooting beautiful things, but we always shoot them beautifully."

James Murphy, a founding partner of Adam & Eve, said, "We had to unlock what John Lewis means to people emotionally. It had never been done before and I wasn't sure if it was even possible. The brand has been on a journey in the last two or three years. ... It's become newly stylish and aspirational."

For vast swathes of "middle England," John Lewis has been a brand that crops up during emotionally charged moments in people's lives -- buying a home, getting married, having a child or that child's first day of school.

This deep connection has been the nucleus of Adam & Eve's two biggest blockbuster ads for the brand: the Ellie Goulding Christmas spot, and its tear-jerking predecessor beautifully tracking a woman's life from cradle to old age as she walks through each era, always with John Lewis products as a backdrop. The ad's soundtrack -- Fyfe Dangerfield's version of Billy Joel's "She's Always a Woman" -- gives a surprising emotional charge to the stolid tagline, "Never knowingly undersold" that has been John Lewis's promise to the British public for a mere 85 years.

"There is a natural tension between our tradition and longevity, and the desire to contemporize the brand," Mr. Inglis said. "Retailers tend to deal with the tangible, but we also needed to build up the 'love' side of the equation."

Craig Inglis, director-marketing: 'We needed to build up the 'love' side of the equation.'
Craig Inglis, director-marketing: 'We needed to build up the 'love' side of the equation.'

In an unusual ownership structure, John Lewis and its supermarket sibling, Waitrose, are owned and staffed by 76,500 partners, all of whom share in the company's profits. Thanks to a 10.6% jump in both sales, to $13 billion, and group operating profit, to $697 million, for the most recent fiscal year ended Jan. 31, the company announced in March that $314 million would be divided among the partners. That represents an 18% bonus for each partner-staffer.

The ownership structure of John Lewis means that most partners see John Lewis as a career. They have a clear stake in the brand's success, and get to know the products well during their long tenure. In a departure from usual sales practice, they are not allowed to "upsell" by advocating products in a higher price range. And service is helpful, but never pushy.

The salary of John Lewis's highest-paid partner is capped at 75 times that of the lowest-paid. After suffering a recession that has hit the middle class and the poor hard but seems to leave highly paid bankers and CEOs unscathed, the British public seems to respect a company that renounces excess.

But with cuts in government spending and rising inflation, consumers feel more squeezed than ever. In the week after the royal wedding-inspired retail boom, the company's sales dropped 1%, proving not even John Lewis is immune to the downturn.

The company's response: Expand its footprint and become relevant to more people. "The opportunities to grow in the U.K. are still huge," Mr. Inglis said. "We still have only 30 shops." The company is opening a new London flagship in September, but given the U.K.'s continuing economic downturn, John Lewis will expand its "At Home" format of smaller stores that focus on home furnishings and technology.

Online shopping is another huge growth area, with sales up 37.9% to $870 million for the year through January 2011. The larger footprint will also include online delivery to other countries in Europe starting this month and, eventually, the U.S. "At some point the U.S. makes sense," Mr. Inglis said, "but we will do it in the right way. We need always to deliver on our promises."

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