The boss of the John Lewis Partnership has hailed the popularity of the group’s loyalty schemes – the myWaitrose and My John Lewis programmes – for an 8.6% rise in first half profits at the company.
Speaking at the group’s interim results announcement, chairman Sir Charlie Mayfield said the growth was driven by the success of its Click & Collect service and an increase in business from existing customers; Waitrose recorded a 670,000 rise in weekly customer transactions.
He said: “Our sales growth was driven by more customers shopping with Waitrose and John Lewis, with customer numbers up by over 6% and 4% respectively. This reflects the growing appeal of our omni-channel offer across both brands, including the success of Click & Collect, which now accounts for more than half of John Lewis orders placed online, and the popularity of the myWaitrose and My John Lewis programmes, which are encouraging customers to shop more frequently with us across all of our channels.”
However, this success has come at a price; due to spiralling costs, the 1 million members of the My John Lewis scheme were recently told they would no longer automatically be entitled to free cake and tea, instead they would be sent vouchers based on how much they spend in John Lewis.
The myWaitrose scheme, which now has 4.8 million members, is continuing to offer the same deal, although the cost of this has eaten into the supermarket chain’s profits. It was forced to issue a warning last month, when it said the “unprecedented” investment in the scheme would have an impact on profit levels.
Operating profit before exceptional items in the six months to July 26 was £176.1m on group revenue which rose 5.7% to £4.5bn. Sales were up 8.2% at department stores and up 1.3% at Waitrose. Waitrose generated total online services gross sales of £161m, while online grocery gross sales surged 54%.
Both loyalty schemes appointed new agencies to handle their marketing activity last year, having previously used Kitcatt Nohr. Proximity London scooped the My John Lewis work, while AIS London landed myWaitrose.
Meanwhile, Mayfield has warned Scots that a “yes” vote in next week’s independence referendum will push up its costs and trigger higher prices north of the border.
The company, which operates a major contact centre in the country as well as John Lewis and Waitrose outlets, had previously claimed it will be “business as usual” if Scotland decides to pull out of the UK.
But, speaking on BBC Breakfast, Mayfield said changes in employment rights and taxes are likely to lead to higher prices.
He said: “Over time, if there is a divergence in terms of employment regulations, taxes, and pensions, which bring with them extra costs – as well as the currency issue – then it has to be more likely that the prices will also diverge and over time you will start to see different prices in Scotland compared with the UK.”
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