The Christmas trading period was far from the turnaround in consumer confidence hoped for by the retailers of the UK, with many failing to match sales figures from previous year despite the end of the recession. In fact, the disappointing period ended up becoming the trigger for both HMV and Jessops to enter administration after failing to convince their creditors that 2013 would see a return to profitability.
However, some long-standing high street favourites did manage to post a very merry Christmas in terms of sales, with the undisputed champion of the season being department store John Lewis. In the five weeks to the 29th of December overall sales rose by an impressive 15 per cent, with the retailer posting consecutive weeks of record breaking profits in the lead up to the big day.
It has come as something of a surprise, therefore, that the company has announced a number of upcoming redundancies in its 28 UK stores.
The 325 planned redundancies will affect departmental managers across the country, a role which generally pays between £35,000 and £45,000 per annum depending on location. These senior role cuts are due to the fact that many consumers now choose to make purchases using the company’s website rather than visiting commercial properties, negating the need for so many managerial positions within the chain’s portfolio.
In a statement released by John Lewis, the board of directors stressed that redundancies would be kept to a minimum, with those affected being transferred to new stores or retrained to fill other positions.
The statement said; “As part of our plans for future growth, we are proposing to streamline management structures in some of our established shops.
“There will be opportunities for redeployment in new roles created as part of this process or in new shops due to open over the next 18 months.”
It is certainly true that consumers are gradually becoming more enamoured of internet shopping, with website sales hugely contributing to the overall 15 per cent boost in sales during the Christmas period. In fact, website sales grew by 44 per cent in the five weeks compared to the same five week period during Christmas 2011.
However, the news is bound to be something of a blow to the 325 store managers now facing an uncertain future with the company, especially thanks to the chain’s approach to the way their staff are treated.
Government ministers have often referred to John Lewis as an example of “responsible capitalism” thanks to their policy of treating staff as partners in the business. The retailer also stands out from competitors thanks to the fact it offers its workers performance related bonuses rather than simply doling the cash incentives out to higher up members of management.
Andy Street, managing director of the popular retailer, insists that the move has nothing to do with increasing profits or competing with businesses based in tax havens – an issue he was very vocal about only three months ago. Instead, he claims that the restructuring plans will ensure the chain’s future success and prevent the situation faced by retailers such as Republic at present.
He says; “What we are doing is anticipating how the retail market is changing and ensuring our shop model is competitive for the long term.
“Otherwise, we will end up in a position that some of our competitors are reflecting.”
Do you think that John Lewis should be commended for fighting back against the general shift online by restructuring its in-store marketing techniques, or does its success over the Christmas period hint that “if it ain’t broke, don’t fix it”?
British Land Expands Retail Portfolio
Gulf Construction Boom Continues