LONDON, March 30 John Lewis ,
Britain's largest department store operator, is hopeful any
downturn in consumer spending will see history repeat itself
with a "flight to quality" rather than consumers opting to trade
down, its new boss said on Thursday.
Managing Director Paula Nickolds said that in Britain's last
recession at the time of the financial crisis in 2008 its
shoppers did not necessarily trade down to cheaper alternatives
but sought fewer, better quality products, helping the retailer
gain market share.
John Lewis, as with all British retailers, is having to deal
with rising costs due to the pound's depreciation in the wake of
last year's vote to leave the European Union, intense
competition and the continuing shift of trade from shops to
There have also been some signs recently that shoppers are
now feeling the impact of rising inflation eroding earnings
"What we saw in 2008 was quite an interesting shift for our
customers - it was more a flight to quality than it was a
trading down," Nickolds told reporters on Thursday, noting the
firm had won market share every year since 2008.
"It remains to be seen what will happen this time round but
my suspicion is people will be much more thoughtful about buying
once and buying well and retailers will have to work harder to
entice people to spend," she said.
"In many respects ... that’s a good thing. It forces
retailers to really up their game."
Nickolds, a 23-year John Lewis veteran and the first woman
to run the 152-year old, employee-owned, chain, succeeded Andy
Street as managing director in January.
Street, MD for a decade, quit the post to contest the
election of the mayor of the West Midlands, a region of central
England, for the ruling Conservative Party.
For the eight weeks to March 25 John Lewis' sales were up
0.6 percent, which analysts estimate equates to a like-for-like
sales fall of 1.5 percent, partly reflecting the earlier fall of
Mothers Day and Easter this year compared to last
"I don't think it will be until the early and middle of May
before we're really able to tell what's happening at an
underlying level," said Nickolds.
She said higher input costs should not be taken to mean
automatically higher prices for shoppers, due to the competitive
nature of the market.
She also noted that John Lewis' 'Never Knowingly Undersold'
price-matching pledge meant it would be "the last to move on
Detailing her plans for the chain she set a target of 50
percent of what John Lewis sells being exclusive to the retailer
or own brand, up from "high 30s" currently.
By 2020 the retailer expects half of its sales to be made
Nickolds also warned there would be more job losses at John
Lewis but declined to provide any numbers.
(Reporting by James Davey; Editing by Greg Mahlich)