John Lewis Partnership Staff Facing Bonus Cut Amid Pressure On Profits; Announces New Customer Service Initiative

Staff working for John Lewis and Waitrose are likely see their annual bonuses reduced this year due to weakened profitability.

The John Lewis Partnership will release its annual results on Thursday with the group expected to report a relatively good overall trading performance for 2016. However, whilst pre-tax profits are predicted to have risen slightly from £306m to £310m, due to a pension funding boost, trading profits are likely to be down around 10% at £431m.

Sources quoted in the press said that this is likely to lead to bonuses being cut to between 6% and 7% of workers’ annual salary, compared to 10% last year.

Whilst enjoying a strong Christmas trading period, Waitrose’s operating profits fell heavily in the first six months of its financial year.  Along with its festive trading statement, the partnership’s chairman, Charlie Mayfield, said although he expected to report profits up on last year, trading profit was under pressure. “This reflects the greater changes taking place across the retail sector. We expect those to quicken, especially in the next 12 months as the effects of weaker Sterling feed through,” he said.

He added that the rate of retail market sales growth may slow in the year ahead and the rate of its profit growth will be affected by margin pressure. The group warned that as a result of these pressures, its much heralded staff bonus was likely to be significantly lower than last year.

Last month, Waitrose revealed that it was planning to close six underperforming stores and simplify the management structure in its supermarkets amid pressure from the tough trading conditions.

Meanwhile, John Lewis has announced that it is investing £4m in equipping 8,000 of its sales staff with iPhones to improve customer service on the shop floor.  Via its new ‘Partner App’ on the smartphones, staff will be able to provide customers with instant information about products, check stock availability and place orders.

The group said the development will put an end to customers waiting for staff to go to stock rooms to see whether a product is in stock, or check information at tills as they will be able to help on the spot. The service will rolled out to 20 John Lewis shops this summer.

Craig Inglis, the department store’s Customer Director, said: “As online and physical worlds increasingly come together, this initiative, which forms the foundation of our digital strategy for shops, will support our Partners in offering great customer service in a digital world.

“During the trial in our Cambridge store, customer feedback was overwhelmingly positive. It consistently speeded up response times to customer queries as Partners didn’t need to leave the customer to find answers, or complete a purchase. This is just the beginning. We will keep adding to the Partner App in the future with new, innovative ways to help our customers.”

NAM Implications:
  • Profit-share is always a way of focussing teams on work productivity, a condition being that pay-outs reflects results, probably acceptable to most participants…
  • Partner-app for shop-floor insight: how about a modified version for personal use by shoppers, allowing staff to focus even more on those in need?