John Lewis has, kind of, known as the tip of the “experience economy”. This is a giant deal, in accordance with the retailer: “a profound and exciting shift”. In its place we’ve the “moments economy”, and John Lewis — center England’s middling retail residence — is set to be the “world’s first moments-based retailer”.
This is clear advertising guff. But get previous that and there would be the kernel of a smart technique.
You won’t have observed you have been dwelling within the expertise financial system. But that’s broadly the theme of the millennial period: that what shoppers have sought out is experiences to go alongside their items and providers. The shift has gone hand in hand with the rise of Instagram and isn’t going away.
But John Lewis’s pitch is that whereas the noughties meant spending on occasions like huge holidays and festivals, customers are actually “looking to bring that same joy to all the moments of our lives” — and can wish to spend extra on on a regular basis issues to make that occur.
This is partially about John Lewis needing to discover a new slogan after jettisoning its “never knowingly undersold” worth promise earlier this 12 months. The pledge was more and more meaningless, as a result of it excluded personal model items and online-only retailers, and costly, as excessive avenue rivals turned to discounting to maintain customers coming in and John Lewis was pressured to match them.
But additionally it is about retailers needing to discover a new mannequin. The expertise financial system has not been variety to the excessive avenue. Optimism that retailers may reinvent themselves as expertise hubs has not been sufficient to offset the excessive property prices.
The “moments economy” is perhaps higher summed up as a chance to promote shoppers extra small stuff extra typically. John Lewis has already acknowledged that it isn’t sufficient simply to be there for all times’s huge moments. That was one implication of the goal introduced in 2020 to diversify additional into areas together with housing and monetary providers, the place it desires to generate 40 per cent of income by the tip of the last decade.
The incontrovertible fact that John Lewis isn’t abandoning that technique signifies the rise of the “moments economy” isn’t as a lot of a second as John Lewis is making it out to be. But it’s nonetheless a chance.
At a time when UK shoppers are more likely to in the reduction of on big-ticket gadgets, specializing in capturing extra small spending is sensible. It is an extension of the lipstick precept, the thesis that buyers are inclined to search for reasonably priced treats when the going is just too powerful to splurge. That is doubly true given the decades-long fall in residence possession charges. The rental technology is much less more likely to decide to giant outlays on furnishings that will not match after they transfer to a brand new place in 12 months’ time.
The partial reversal of the pandemic-era shift to on-line purchasing can also be in John Lewis’s favour.
Companies similar to Shopify, which guess huge on a generation-defining change, are now not ascendant. Years of declining income even earlier than the pandemic imply John Lewis has already been pressured to do the arduous work of shutting shops and stabilising its funds (although there may at all times be extra to come back). It now has the mass-market division retailer market virtually completely to itself.
The partnership’s retail proposition is already bettering. Its app, web site and shops are all getting higher. But the jury remains to be out on its most important reply to the ecommerce problem to this point: a higher concentrate on personal model items and a brand new finances “Anyday” vary.
The danger it takes is that it affords high quality that’s no higher than finances retailers like Ikea however at larger costs. It can also decrease its market standing within the course of — and expose itself to fierce homewares competitors from the likes of Dunelm and Wilko.
Interim outcomes subsequent week will present extra element, however there are already indications on the Waitrose aspect of the group that the revamp isn’t panning out fairly as deliberate. The grocer has misplaced gross sales and market share whereas rival M&S’s meals providing seems to be resurgent.
There might be no such factor as a moments financial system. Shopping extra for on a regular basis moments sits awkwardly with the sustainability ethos of the group. But that just about doesn’t matter so long as the idea of the moments financial system offers a rationale for the enterprise to rally round and refocus.
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