Christmas web sales boost for John Lewis

Monday 05 January 2015

Department store John Lewis relied on internet purchases to grow sales over Christmas as trade at its shop counters fell, the business revealed today.

Like-for-like sales across the retailer grew by 4.8% for the five weeks to December 27 but in stores they were about 1% lower. Total sales were £777 million.

Managing director Andy Street said despite the fall, the sales performance from its outlets was ahead of rivals.

"I am utterly confident that our shop result will beat the market," he said.

John Lewis is also pressing ahead with plans to grow its store numbers from 42 currently to 65, with a focus on locations such as Birmingham, Leeds and Oxford. Establishing a physical shop presence is seen by Mr Street as key to winning internet customers - so that they can browse products in store before placing orders or use them as locations to pick up click and collect purchases.

He said: "The role of the shop is absolutely critical in providing the online sales."

Online takings grew by 19% over the festive period, representing 36% of trade. Click-and-collect represented 56% of online orders, overtaking home delivery.

John Lewis's like-for-like store sales for the year-to-date were still ahead, by about 2.5%, but its reliance on online reflects a growing trend in retail - with recent Christmas figures from Next also showing web sales led the way as it posted a solid performance.

The importance of internet trading in shoring up sales may cause concern for Marks & Spencer as it prepares to publish its Christmas trading update this week. Its website has been struggling since a revamp early in 2014 and suffered delivery problems over the festive trading period.

Mr Street said pointedly of his own firm's multi-channel operations that "all operations coped admirably" though he declined to be drawn on comparisons with the difficulties experienced by rivals.

John Lewis saw the biggest week in its history with sales of £179.1 million over the week including Black Friday - the period blamed by M&S for its delivery problems - with website traffic up 300% during the early hours on the day.

Mr Street said: "What was really, really clear to us is that one of the tests for every brand was 'would they manage the fulfilment challenge?' That is what customers were relying on."

The Black Friday phenomenon, imported from the US, caused a major shift in the festive shopping timetable as the week at the end of November saw the greatest trading rather than the days leading up to 25 December as had previously happened. It had a knock on effect for the weeks ending 20 December and 27 December, when overall sales fell - though for the latter week this was partly attributed to the timing of Christmas pushing back the timing of popular clearance sales.

Electrical sales led the way on Black Friday - which fell on 28 November - helping John Lewis grow revenues from these goods by 6.8% over the five-week period.

However, Mr Street said the "phenomenal" sales increases for tablet computers seen recently had slowed.

More traditional large electrical items such as televisions instead led the way together with smaller appliances such as coffee makers and hair straighteners.

Mr Street said: "This year confirmed the new shape of trade for Christmas, with an early peak at the end of November driven by Black Friday and last minute gift buying. With Black Friday driving a higher proportion of online sales and customers increasingly wanting more convenience, this has meant a real concentration on fulfilment.

"The investments we have made and the new capabilities we have built in recent years in distribution and IT have been fundamental in ensuring we successfully navigate this changing shape of trade. Our shops continue to have a critical role to play in the omnichannel shopping journey, and will be a major development focus for us over the coming months."