John Lewis feels the pinch as shoppers cut back
Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, comments on John Lewis’ interim results: “Elevated prices, borrowing costs and uncertainty around the jobs market are making John Lewis’ core customers, of middle and higher-income families, increasingly cautious. The retailer is particularly exposed to big-ticket, deferrable categories like home, furniture and electricals - exactly where these consumers are choosing to cutback or delay spending.
“Profitability is also being squeezed from both sides, with softer demand alongside higher employment and technology costs. At the same time, the Partnership is continuing to invest through the downturn, increasing investment by almost 30% as it modernises stores, technology and its customer offer. The challenge will be ensuring that investment translates into stronger sales with consumer confidence still fragile.
“For Waitrose, the picture is more encouraging. Growth in its premium No.1 range shows consumers are still willing to trade up where they see quality and value, while investment in convenience and prepared food is helping it compete more directly with M&S.
“The next challenge for Waitrose is its store estate. Refurbished stores are already seeing stronger sales and customer satisfaction, but the business needs to accelerate that modernisation to keep pace with M&S. For a premium grocer, the store experience needs to feel premium too.”