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Potential for partnership

The John Lewis partnership has ambitious growth plans – and it wants to work with contractors that share its vision

Its public strapline ‘Never knowingly undersold’ conjures up an honest firm which does its best for its customers. Its unofficial mantra for how it wants to construct new stores is similarly straightforward: ‘Simpler, better, cheaper’.

While some retailers have taken a battering this summer, the company in question is riding the storm, despite a 27 per cent fall in first-half profits.

The John Lewis Partnership may prefer not to shout publicly about its achievements, but it has set its sights on ambitious UK growth.

“JLP had an aspiration to build 10 shops in 10 years and now we’ve got aspirations that way, way exceed that. In terms of property and construction activity we’re still very bullish about our future,” says Tony Jacob, head of construction management for both John Lewis and Waitrose stores.

“There is massive untapped potential for the brand in the UK alone,” he adds. “When we look at maps of where we are, there are huge parts of the UK which don’t have access to a John Lewis or Waitrose.”

JLP will be spending an average of £200 million a year over the next 10 years on new stores and it wants to double the size of the business. The only area which may be cut down is refurbishment of older stores.

But it hasn’t escaped the downturn entirely. One of the new John Lewis stores was due to be the anchor for Westgate shopping centre in Oxford. Its fate now hangs in the balance as developer Capital Shopping Centres has put the programme for the extension of Westgate on hold. This was a disappointment, says Mr Jacob, but he has sympathy with his landlord.

Prudent to check

“CSC is looking at the fundamentals of the scheme. Before they commit to the next wave of major investment and disruption to the city centre, it would be prudent to check that the whole viability of the scheme is absolutely sound. I’m watching and waiting to see what comes though. We totally understand the stance of that,” he says.

But wasn’t this a blow to JLP’s ambitions? “We just have to ride that to create our own development activity in our own development pipeline. It is a challenge,” says Mr Jacob.

But he is convinced that Westgate will go ahead and points out that Cambridge’s Grand Arcade centre was as much as 15 years in the pipeline.

It will make up for the loss of floor space for 2011 by reducing the size of the sales floor of new-build department stores to 100,000 sq ft from about 150,000 sq ft, which will mean it can build in locations it hadn’t considered previously.

The firm opened a 242,000 sq ft department store in Leicester’s Highcross centre earlier this month and it came in under its £33 million budget.

“Sir Robert McAlpine has done a fantastic shell and Hammerson a great design; we’ve said thank you to those organisations.

“We are really pleased with Wates – they have given us great service. We’re not an organisation that’s renowned for shouting about our achievements but this is as loud as it gets,” he says.

Mr Jacob adds that if he did Leicester again, he would put more clarity into things. “Clarity into the brief, clarity into the team structure and set up, the way the designs were managed. It’s still a fantastic shop but there are still opportunities to save money,” he says.

He prides himself on the fact that all his programmes come on or under budget, but the redevelopment of the largest John Lewis in London’s Oxford Street came out at £70 million, which was three or four per cent above the original budget.

“It was the hardest thing I have ever been asked to do and we did it at an incredible pace – it was inordinately difficult,” he says, partly because the store was kept open during the 18-month refurbishment.

Quicker and cheaper

The growth programme has been introduced over the past year following a review with EC Harris which has moved the retailer towards ‘simpler, better, cheaper’ construction.

An internal step-change programme has saved 20 per cent off the bottom line in a department store fit-out and 18 per cent for a supermarket. “That’s collaboration with the supply chain, so our contractors are looking at ways of doing things quicker and cheaper,” says Mr Jacob.

But this doesn’t suit everyone.

“As we’ve stepped up our targets, some people have thrived on it and others have elected not to,” he says. He adds that the firm always looks for “simpler ways, better ways, cheaper ways of doing it,” and wants contractors that share that philosophy.

“We are a partnership and a unique business built on teamwork and collaboration and on relationships – we pick people that we want to have fun with and build a relationship.”

Will it follow its contractor Wates to tackle the Middle East? “The potential is as big as ever and we’re just chipping away at it. I’d love it if we could turn it into a global brand but who knows?”

Tony Jacob is speaking at Retail Construction and the Credit Crunch, organised by Construction News, on 30 September.