John Lewis’s corporate reputation has taken a blow after the advertising watchdog ruled an Apple Watch promotion at the store was “not conducted… fairly”.
The retailer, which prides itself on its “never knowingly undersold” motto, had offered the Apple Watch for £249 to bring it into line with a competitor’s promotion during last year’s Black Friday sales period and advertised the deal heavily on the John Lewis website.
However, a shopper complained to the Advertising Standards Agency (ASA) that the watch was listed as being out of stock when she tried to buy it, but “it was made available the following day at full price”. The price-matched Apple Watch remained out of stock until after the four-day Black Friday sale had concluded.
John Lewis said the regulator’s decision resulted from a “misunderstanding of the difference between a one-day unplanned price match… and planned John Lewis four-day Black Friday promotions,” says The Guardian.
The store did, however, admit the Apple Watch was removed from the website “sooner than it could have been” over “concerns [it] would not have enough stock to fulfil all orders”. It added that the watch remained on sale at the promotional price in stores.
The ASA ruled: “We acknowledged that the offer arose from John Lewis’ Price Match policy rather than a price promotion they had planned.
“However… we considered John Lewis’ action to make a product unavailable on their website while their competitor’s promotion was still running denied online consumers the opportunity to purchase at the Price Match price, despite John Lewis still having stock available.
“We considered John Lewis had not conducted the promotion fairly, resulting in unnecessary disappointment. We therefore concluded that the promotion had breached the code.
“We told John Lewis to ensure they dealt fairly with consumers in future,” it added, reports the Daily Mirror.
John Lewis staff bonus is lowest since 1954
John Lewis staff are set to receive their lowest annual cash bonus for 63 years as the retailer grapples with a tough retail climate and early fallout from the Brexit vote.
Sources at the partnership, which is owned by its 91,500 staff across its John Lewis department store and Waitrose supermarket brands, told The Guardian it will this week announce a bonus of between six and seven per cent of workers’ annual salary.
The payout has been falling consistently since 2013, when it stood at 17 per cent. This year’s will be the lowest since the four per cent paid in 1954. Last year employees were paid ten per cent, or an average of £1,585.
A bonus was first paid to employee-owners at the end of the First World War and until 1969 it was provided in either shares or a mixture of stock and cash. Bonuses stopped altogether during the Second World War and during the recession of the early 1950s.
Payouts reached an all-time high of 24 per cent in the 1980s. In 2011, they peaked at 18 per cent.
In January, John Lewis bosses warned that the payout was set to be cut, despite the fact that the company is expected to confirm that pre-tax earnings increased from £306m to around £310m last year.
But underlying earnings, which strip out one-off expenses and, crucially this year, any beneficial effects from a change in pension funding, are set to have fallen by ten per cent to £431m.
Retailers are grappling with intense competition and price pressures, not least because of the continuing growth of online shopping. The Brexit vote is also increasing import costs and this could eat into profit margins in the months ahead.
Sir Charlie Mayfield, the partnership’s chairman, described the sterling slump since the EU referendum as “the dog that hasn’t really barked”.
Nick Bubb, an independent retail analyst, said: “The John Lewis board is likely to be mindful of the fact that underlying profits look to have fallen by over ten per cent last year, despite a decent Christmas.
“With trading in the new year off to a sluggish start, it will have to allow for the fact that profits will probably fall again this year as well.”
John Lewis to cut hundreds of jobs in shake-up
John Lewis is to cut hundreds of jobs in a shake-up of its soft furnishings and in-store restaurant operations.
A total of 773 staff will enter a period of consultation on possible redundancy. With 386 new roles to be created, that leads to a net loss of 387 jobs, says Reuters.
The retailer will “centralise the administration behind its curtain and carpet estimating and fitting services, moving jobs out of stores to its office in Didsbury, Manchester”, says The Guardian.
“Carpet estimators and fitters will not be affected by the job cuts but will now work for customers who buy online and from the high street outlets.”
In addition, in-store food preparation is being largely culled in favour of “having ready-made dishes delivered by external suppliers”.
Dino Rocos, operations director at John Lewis, said: “The proposed new structure will allow us to harness [workers’] knowledge and skills, giving them more scope to be in the right place at the right time to deliver great service.”
John Lewis has warned that the group is facing a tougher trading environment in the months ahead, which means profits could come under pressure and bonuses will be cut, even though sales have been on the rise.
The changes “mark the first significant move of Paula Nickolds who succeeded Andy Street as John Lewis’ managing director last month”, says Reuters.