150 years on, here’s why John Lewis is a company of tomorrow
Paula Nickolds is not one for fluffy talk. When the buying and brand director at the John Lewis Partnership, one of the UK's most respected retail businesses, took on her position as chief decision maker for the bounty of products that John Lewis offers to customers, she was reportedly firm on the notion that “trading is all about trading into profit".
So we were told by Tony Manwaring, CEO of the global think-tank Tommorrow’s Company, as he introduced Paula's keynote speech at Rethinking the Value Chain, an event convened by Tomorrow's Company in London this week.
In a light-hearted response, Nickolds told the audience that she was all for straight-talking, but she didn’t recall those being her exact words. Whatever she did or did not say about the importance of profit when she assumed her current role a year ago, the insight Nickolds gave into the inner workings of John Lewis in its 150th year suggested that there was much more to her role than sticking to an Excel spreadsheet with products in one column and margin requirements in another.
As an employee-owned business that gives its 91,000 employees a say in (and a share in) the business, a key part of the brand's historic and future-oriented strategy is about protecting long-term relationships with employees and customers – and now, increasingly, suppliers.
“The essence of our approach is about longstanding relationships, teamwork and a sense that you’re in it together,” Nickolds told Pioneers Post. This way “we can face emerging challenges and pull intellectual and material resources to chart choppy waters".
And that’s no fluffy talk. “Business is all about the supply chain now,” said Guy Stratford, another speaker at the event, and chief client officer at Proxima, the alternative sourcing company. “Thirteen percent of corporate spends go on people and 69% on suppliers,” he said, adding that, without doubt, “the greatest driver of profitability is how effectively you manage your suppliers".
Simon Spinks, managing director of luxury bed manufacturer Harrison Spinks, gave his account of what it was like being in the John Lewis supply chain. “I thought I was here to sell beds,” he said. And he did give the audience an exceptional sales pitch. But beneath his characterful product placement, there was a story about how John Lewis treats its suppliers: “We work hard in each other's interests,” he said.
It hadn't always gone smoothly. “It’s been worrying at times,” Spinks admitted. In a particularly tense period Spinks had stopped Nickolds in the corridor of John Lewis’ head office and explained that her buying team was about to “overstep the mark”. And a likely source of conflict was margins – private sector incentives to drive costs down alongside supplier resistance.
But it didn't end the relationship. Spinks had worked hard with the support of John Lewis to ‘grow’ a natural mattress with locally sourced ingredients. It was John Lewis who saw the market for a mattress that was 100% recyclable. And the Spinks technology, a comfort spring now used in everything from top-branded trainers to car seats, that made it possible – otherwise you’d get a completely flat bed, Spinks explained.
Inspired by the idea, Spinks took it further. Based in Yorkshire, he spoke to a local farmer to find out if they could grow materials used in mattresses locally. A nod to the nearby flocks of sheep convinced Spinks it was possible.
He ended up in a three way bidding war for a farm soaring in price and moving out of his reach. But John Lewis was on board with idea and supported his bid. Harrison Spinks now grows its materials for its own beds and sells mattresses that are fully recyclable and made with locally sourced hemp, flax and wool.
“We had a product with things going on behind it that added value,” Spinks said. Sales went up by 25% that year, and the business itself “grew massively” said Spinks. The farm is now also used for holidays and weddings, generating an income that gets invested back into the business.
The shared journey Spinks went on with John Lewis meant that they had developed an “understanding – less of a supplier relationship and more of a partnership”, said Spinks. It lead to innovation, and it got them through worrying times, even if he did need a few urgent words with the brand director.