Another year means another John Lewis advert. It’s the big one that everyone waits for – a standard bearer that’s expected to set the bar every Christmas. But with great responsibility comes great investment, and with John Lewis struggling to remain profitable, is its money better spent elsewhere?
The beginning of autumn ushered in some particularly bad news for the brand. In September, John Lewis reported its first-ever half-year underlying pre-tax loss, to the tune of £25.9 million. Admittedly, the same period the year before wasn’t stellar, but it was at least in the black – it reaped an £800,000 profit.
At the time of the financial announcement, the gears were in motion for the production of what is, arguably, John Lewis’ best-known asset. This year, its Christmas advert came in at an estimated £7 million, not counting additional costs for media placement and complementary products. That’s more than many rivals’ entire TV advertising budget for the full year.
But now, the “big ad” is more the “done thing”. Rivals like Asda, Sainsbury’s, Aldi and M&S have spent years making moves on the department store’s festive marketing; what was once John Lewis’ defining moment in the winter sun has now become more of a Cold War. While the real Cold War was a stalemate, John Lewis – more than any other player – seems closer to losing its grip on power than many of its rivals.
It’s time for John Lewis to move on from such a high-ticket Christmas ad and focus its investment on the other problems it may have.
Has the golden age passed?
The John Lewis & Partners ad is now such a cultural phenomenon that it has its own Wikipedia page. This year’s offering, which charts Excitable Edgar’s shift from social pariah to beloved member of the community, came in as John Lewis’ second-most watched Xmas spot of its last six in the initial 24-hour period.
However, CityAM also pointed out that in a poll by Unruly, newcomer Very beat John Lewis as the most engaging Christmas advert, noting that “fear of missing out” seems to be the one thing powering the trend for big-budget commercials. He explains: “Bearing in mind the increasing costs of rents and wages, it’s a surprise that high street chains are still spending so much on glitzy commercials. But perhaps the reason they are doing so is simply due to an all-too-human fear.
“Fear of missing out is an understandable emotion, but perhaps not a logical one. Brands need to get over this anxiety, and spend their money more wisely next Christmas.”
Yet John Lewis’ advertising investment has remained high, despite profits going the other way. It’s time for John Lewis to rethink its spending strategy ahead during 2020 – especially when a £100 advert can make plenty of headlines in its own right, and budget can be diverted to more pressing matters.
What should John Lewis be focusing investment on?
If there’s one thing holding customers back from committing to buying from John Lewis, it’s the reviews of its customer service. A lot of this stems from its legacy IT system problems; back in 2015, it was reported that its tech infrastructure made “dealing with some problems impossible”. While these IT issues were being actively resolved as of 2017, the trend for poor reviews continues. Of all the things that a few million pounds could help, it’s an investment in the very thing that made it the people’s choice.
Core services to get people into store
As we discovered in our RES 100 this year, John Lewis placed in joint 41st place out of 100 for six core services. Mid-table does not mean average performance, though; it came out with a score of just 31/100.
Much of this was down to two core services that either lacked or were unavailable, despite both generating potentially massive footfall: click and collect, and store stock check.
We’re big on click and collect for many reasons, but it must be fast and free to deliver on consumer expectations. John Lewis only makes it free for orders of £30 and over; it’s £2 if you spend less. Meanwhile, you always have to wait at least one night to receive your order – placing your online order before 8pm only makes it ready for you to collect after 2pm the following day, even if the product’s in store.
There’s no way to know if the item is in store, as John Lewis doesn’t operate store stock check. As we said last year, accurate inventory is the defining retail investment for 2019 because it has the potential to save businesses millions on posting things to store; instead, they can sweat in-store assets.
Those who were unwilling to make that accurate and transparent inventory a priority this year are already falling behind. John Lewis still has a small window to catch up, but if it doesn’t, it could haemorrhage even more visitors who have come to expect it as a standard offering from dozens of rival retailers, denting trust of consumers who need the guarantee that the brand will give them what they need, when they need it.
Moving the advertising creativity into store
While John Lewis’ stores feel cleaner, more modern and often less cramped than other department store rivals, this doesn’t make them averse to the same problems that have led to rampant closures by rivals Debenhams, House of Fraser and M&S – or the outright death of BHS. It’s time for John Lewis to put its money into trialling new ideas in store and break the mould that now suffocated its rivals.
It’s in a good position to do this. As the BBC explained earlier this year, “[e]mployees own the company and so they are trusted to take on more consultative roles with shoppers, she says, offering the kind of service an online shop cannot.” What’s more, the report also pointed to how Selfridges, which continues to do very well, is regularly putting money into experiential things to get people into store; at Christmas, it “helped draw customers through various entertainments including a Christmas cabaret, confetti cannons, visits from Father Christmas and choirs.”
John Lewis has the reputation to pull this off, and the creativity to make such experiences available year round. Whether it’s product and partnership strategies, charity drives (such as its work with Age UK for its “Man on the Moon” ad), community initiative pairings or just the odd celebrity, it’s better than the norm: lots of products, lots of floors and little differentiation from what John Lewis offered ten years ago.
It’s time to do things differently again
While there’ll always be a Christmas ad for John Lewis – it’s still a strong means of reaching an expectant audience, after all – the whole reason the company made a name for itself in that arena in the first place was because it was a trailblazer. Now, it’s stagnating as everyone else does the same as it – and we all know what happens to high-street retailers that stagnate.
By reinstilling both trust and excitement in customers – specifically through its high-street presence – the company could really go back to the glory days. However, it’s going to have to act fast; it only takes another couple of poor financial announcements to seal the fate of its stores in the coming years. Just ask its rivals.