The Covid pandemic has hit retailing hard. Government support (though important) has in no way matched the lost sales and business. Previous trends have been accelerated, most notably in terms of online sales. Retailers of all shapes and sizes have been confronted with an existential threat, both at store and company level. A reconsideration of how and where retailers operate is only to be expected.
Which is why the ongoing reduction in the John Lewis store portfolio is not really a surprise. We can gloss over the recent direction of the organisation and some of the decisions (branding, store options) and recognise that the new leadership has considerable issues to confront. John Lewis is a large space user, often in expensive locations, at a time when their online business has been hugely successful. A consideration of what stores they need, of what form and size, and where, was inevitable, and appropriate.
These trends all lead to Aberdeen and the decision – much covered in the local media – to close the John Lewis Aberdeen store and retreat in Scotland to the two major cities only. Aberdeen is an outlier for the portfolio in many ways; a large-ish city, geographically distant, with a perceived legacy of reliance on oil and gas from the North Sea. Times have not recently been easy, but the city has been trying to reinvent and refocus itself.
The John Lewis store in Aberdeen comprises in part a distinctive late 1960s building (originally built for Norco, the co-operative society). Beauty is of course in the eye of the beholder. John Lewis opened their Aberdeen store in October 1989. The micro-location may not be as good as it once was. The costs of running the store versus the footfall and sales may be too high. Alterations to the store to make it fit for modern operations may be an expensive option. John Lewis will know their costs, their catchment and local (and regional) online actuals and potential. The decision, from a John Lewis point of view (if we ignore the local 260+ Partners, and we should not forget about the impact on them) may be quite straightforward. Their discussions, with a quickly convened local task force, about maintaining a presence in Aberdeen may provide a possible solution, and this might involve a Waitrose operation, but nothing is yet clear. They could walk away completely.
However, two more longer term points should weigh on all minds (see also my comments in the local media).
First, are the operations and lessons of the last 15 months the best predictions of the future? Trade has been altered and decimated. None of us really know where and how it will settle down in say 3-5 years’ time.
Secondly, the cost calculations are being made on current assumptions. We have to sort out the tax and cost regimes of town centre and city locations versus out of town and online retailing (and wider operations) if we want towns and city centres to flourish. If that happens then the balance switches and operations may be more attractive in central locations.
We argued this and developed some recommendations to help bring this about in the recent Review of the Town Centre Action Plan. We need to build locally on that wider vision of what town and city centres should be about and how and how they attract people. If we get these things right then the attractiveness of city and town centre sites change. Decisions taken now, assuming the world will stay as it is in cost, tax and other business and consumer regime senses, may be understandable as businesses struggle to survive and emerge from the pandemic and to see a way forward. But, they may be poor decisions nonetheless, especially when we gain some distance and hindsight from today.
For a retailer with a cachet and a draw, looking to remodel their costs, obtain a site and location which more closely fits their new needs, driving a hard bargain in recognition of their status as an asset, makes a lot of sense. Time will tell if such a deal can be struck in Aberdeen. There is a large consumer market to be gained one suspects. As for the future of that distinctive building, that will also have to wait.