In one of the more intriguing Covid-inspired commercial pivots has been delivered by one of the UK’s leading retailers.
English giant, John Lewis has been severely impacted across all high-street outlets, with retail having been decimated by government imposed Covid-restrictions.
In response to the ongoing impact that covid-controls is likely to have into the future, John Lewis has decided to pivot to what is technically a ‘built-to-rent’ model, and become a property developer and builder.
The logic makes sense, although the pivot from retail to property construction is out of left field, to say the least.
The retail giant is set to become a residential landlord as part of a major overhaul that will see the department store chain cut £300m of costs and diversify beyond traditional retailing in response dire trading on the high street.
The partnership plans to build rental homes at 20 of its sites across the UK, offer more financial services to customers, invest £1bn in its online operations over the next five years and expand Waitrose‘s rapid delivery service through Deliveroo.
John Lewis said it was making the moves because retail profits alone will no longer be sufficient to “pay the wages we would like, or invest in our customers and communities”. It is hoped new areas of business will account for 40 per cent of profits by 2030.
The new strategy unveiled by chair Sharon White aims to generate 40% of future profits from areas such as financial services and private and affordable housing by 2030.
First planning applications will be submitted in the new year for sites in London where John Lewis would become the landlord once housing is built. The retailer is looking at building flats above or around stores.
White said: “We’ve identified 20 sites we own that could be used to benefit local communities by providing quality and sustainable housing while providing a stable income for the Partnership.
“We’ll make planning applications for two of these in the new year in greater London.
“Entering the ‘build to rent’ market also allows us to furnish properties using John Lewis Home products and deliver Waitrose food.
“We’re a landlord already at three of our properties so this is an obvious extension for us. And we’re now talking to developers and investors who can help us achieve our ambitions.”
The new ideas are part of a strategy to revive the business, which has 42 department stores and more than 330 supermarkets, and which was facing big problems, mainly caused by the switch to online shopping, even before the pandemic forced the closure of its department stores during the national lockdown in the spring.
Patrick Lewis, the finance director, said John Lewis’s plan anticipated that “the current uncertainty we face will continue for a considerable period”.
John Lewis aims to build new homes above or beside 20 Waitrose stores and will also review the development opportunities of other properties it owns.
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