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EDITORIAL COMMENT

The “Golden Quarter,” that period from October through to Christmas and the New Year when retailers expect to make the profits that put a shine on twelve months’ hard work, has lost some of its lustre. “Black Friday,” this year scheduled for November 23 but actually lasting for weeks, is more about turnover than margin. Does anyone remember the old saying: “Turnover is vanity, profit is sanity”?

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hese annual retail self-harm events, “most promotional market” as code for where discounting seems to be the “most savage discounting.”) Sir Charlie adds only resort, are a prompt for retailers that “the pressure on gross margin has – especially in the CE sector where margins predominantly been from our commitment are particularly thin – to think carefully about to maintain price competitiveness,” and what choices you have. goes on to say that this reflects, among Do you want to be known for your product other things, “our Never Knowingly expertise; your friendliness; your skilful Undersold promise, where we have seen an ranging; your convenience; your setup and unprecedented level of price matching as installation services; your provision of an other retailers have discounted heavily.” A engaging experience; your after sales support; warning to all retailers that if you see being your unbeatably low prices? All of these, the cheapest as so important that you make and every combination of them, can be valid it a brand-defining promise, you’re going ambitions for a retailer. The combination will to suffer heavily from a fiercely competitive be an individual one depending on what you discounting environment. sell, where you are and who you see as your It will be interesting to see how JLP customer base. But you can’t be all of these handles its “Never Knowingly Undersold” things, and if you want to be cheapest, your promise into the future, alongside its other margins will limit your ability to be excellent in reputational asset of “delivering the values other aspects of your retail offering. of expertise, trust and customer This may be obvious, but service expected from the its importance has been John Lewis & Partners brought into sharper focus brand.” Perhaps it’s time “Perhaps it’s time by the half-year results to admit that you can’t to admit that you of a retailer that has be the cheapest and can’t be the cheapest always been seen as the best. Something and the best. Something an example of how has to give, and if you has to give, and if you to run an effective value your reputation value your reputation for multi-channel retail for delivering delivering quality service, operation. The John quality service, that that something Lewis Partnership has something is price. is price.” reported profit before tax But probably most & exceptional items down chilling for CE retailers 98.8% for the half-year to 28 was Sir Charlie’s comment July 2018. In the same period, that “gross margin was also gross sales were up by 1.6%. Interpretation affected by a sales mix shift towards of these figures is never simple, but it’s electronics rather than big ticket items in not over-simplifying too much to say that, Home.” In other words, the more CE we sell where a modest increase in gross sales and as a proportion of our total home appliances a massive drop in profits coincide, margins sales, the smaller our margins. What is this may have something to do with it. industry doing to its potentially most exciting JLP Chairman Sir Charlie Mayfield’s category? comments on the figures (see page 6 of JLP cannot afford to stop ranging this issue) are enlightening and frightening. CE in its stores, because it’s part of the He says John Lewis & Partners’ gross comprehensive offering. But all retailers are margin “has been squeezed in what has faced with choices, and it’s a question of been the most promotional market we’ve how much profit you want to sacrifice in the seen in almost a decade.” (We are taking pursuit of sales.

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