The Partnership plans to save GBP300m per year by 2022

The Partnership plans to save GBP300m per year by 2022

Retailer the John Lewis Partnership is embarking on a new five-year plan aimed at delivering GBP400m (US$517.8m) profit by 2025 and investing in more digital and virtual shopping services.

Outlining its Partnership Plan this morning (16 October), the group – which operates the John Lewis & Partners department stores and Waitrose supermarkets – said it hopes to see profit reach GBP200m in the next two years. Last month it revealed a loss before tax in the first half of GBP635m (US$822m), with its robust online operation propping up the business.

As part of its digital push, the group is committing GBP1bn over five years to accelerate its online business and transform its shops. "This will make it easier for customers to shop with us on our websites and apps, and provide more convenient delivery options."

To do this, the group plans to save GBP300m per year by 2022 by making its operations and head offices "simpler and more efficient." While it did not specify how many, or indeed if this will lead to job cuts, it noted making the savings is "crucial to free up money to invest and to deliver our plan."

The group told just-style the savings are also related to reducing its spend on goods not for resale; its cost of goods; and from its operations such as property. 

Also in the pipeline are investments in more virtual services like personal styling, home design and a virtual John Lewis Christmas shop, with the Partnership committing GBP400m to grow in areas such as financial services, housing, and garden design and landscaping.

It adds: "We're also doing so because tightening retail margins in the long term won't allow us to pay the wages we would like, or invest in our customers and communities. We're targeting 40% of our profits from new areas by 2030."

Meanwhile, the Partnership is also bringing forward its ambition to be net zero carbon by 15 years to 2035; all product categories will have a 'buy back' or 'take back' solution by 2025; all key raw materials in John Lewis' own-brand products will be from sustainable or recycled sources by 2025; and the retailer will develop sustainable rental and resale options for customers.

The news comes three months after its department store arm, John Lewis & Partners, said it is working to become digital first with plans to add extra services outside of retail. Across the group it said it would permanently close eight John Lewis stores, leaving a portfolio of 42 stores.