Authenticity, fairness and customer loyalty

Sure, profits may be down 26% as it strives to maintain cost competitiveness, but John Lewis is still outperforming most of the high street. Profits were still a very respectable £279.6m in 2008, and sales were even up 3% on last year to £6.79bn.

Equally significant, though, is that it’s been able to pay its staff a 13% bonus, and there can’t be too many companies able to do that right now.

Of course, the main reason for that is the John Lewis partnership philosophy – all its employees (or ‘partners’) are co-owners of the business, with profits being shared among them.

Picking up on my previous post, what’s really interesting about this is how the internal culture of the organisation has so indelibly imprinted itself on the minds of consumers.

A more textbook example of an authentic brand you couldn’t hope to find – the employer brand (‘A different sort of job’) and the corporate/consumer brand (‘Never knowingly undersold’) evidently united by a core thought of ‘fairness’.

The absence of shareholders is undoubtedly a major proof-point behind this brand story – the principle that, without the need to play to their demands, John Lewis is free to focus all its attention on looking after its customers, its suppliers and its staff.

Again, that idea has clearly implanted itself in consumers’ consciousness. Indeed, watching reports on Newsnight the other night, it was remarkable that, even in this downturn, the thought of shopping anywhere else simply didn’t enter John Lewis customers’ minds.

They eschew trading down because they perceive shopping with the costermongers inevitably involves some sort of compromise – either on quality, on service or on ethics. For other retailers to cut prices, whilst maintaining profits and shareholder returns, someone else must be taking the hit – if not them, then someone else in the supply chain.

The essence of the value proposition? John Lewis may not be the cheapest, but ‘you get what you pay for’ and no-one gets screwed in the process. And judging by the results, it’s one that appeals to a lot of people.

So should John Lewis’ partnership model be seen as the prototype for a different, more responsible form of capitalism? I don’t know.

Regardless, what I do know is that many other businesses could learn a lot from them – about what it means to be authentic, to be responsible, and how both can make a huge difference to a company’s competitiveness.

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