Why has John Lewis brought back Never Knowingly Undersold?

The announcement of John Lewis’s half year results brought with it an unexpected announcement, the return of the company’s Never Knowingly Undersold motto. The company abandoned the slogan in February 2022 as it claimed it was struggling to compete with online retailers such as Amazon. Now, the Partnership claims that it is back and fit for the modern age with new technology to help. Why was it dropped? The company first adopted the slogan in 1925 and it did not apply to online purchases. As previously stated John Lewis dropped the slogan in response to increased competition from online retailers. Online retailers often had much lower costs than John Lewis, especially those with no bricks and mortar stores like amazon. This meant that if John Lewis was undercut by online retailers it faced a conundrum, either reduce the price of a product down to a point where it was no longer financially viable for it or go against the slogan. Pippa Wicks, executive director who left the company in 2023, said: ”’Never Knowingly Undersold' has been a cherished sign of trust for John Lewis for a century but it doesn't fit with how customers shop today as more purchases are made online.” Why has it returned? There are a number of reasons why John Lewis may have chosen to bring the slogan back. Possibly the biggest reason is the fact the company is making money again. The Partnership revealed that its losses-before-tax closed to £30m, down from £59m, a decrease of 49%, for the 26 weeks ended 27 July 2024. Alongside this, the retailer’s losses-before-tax and exceptional items reduced by 91% from £57m down to just £5m. As a result of this John Lewis believes it is on track to deliver significantly higher profits for the full year. Compare this with 2022 when the decision was made to drop the slogan and you can see a very different picture. In FY22 the company’s loss before tax was £26m and it only saw its overall sales increase by 1%. At the same time the company reduced management roles in its shops, and closed eight John Lewis stores and a delivery hub. Another factor behind the rebirth of the slogan could be put down to the change in leadership at the top of the Partnership. Sharon White, who has been chair of the Partnership since 2022, is set to step down and be replaced by former Tesco boss Jason Tarry. Furthermore, Peter Ruis has returned to the business as executive director. It could be argued that the new leadership team is looking to stamp its mark on the company and showcase the confidence they have in the brand. It also brings some positivity to a company which has been surrounded by lots of negativity in recent years. How is it different? Potentially the biggest reason behind the company bringing back the slogan is the fact that the policy has been redeveloped for the modern age. John Lewis will now match its prices to 25 competitors with a “new AI technology tool”. The company hopes that this will keep it competitive. “It's a different price promise. We've been wargaming the tool looking at the marketplace.The point I made last week is we've always had really good prices, so this has just sharpened us up in a few areas. We do not see a significant challenge or margin coming from this change, it will just adapt how we work with our supply base, how our brands adapt when we have our promotions during the course of this half year,” says Nish Kankiwala, John Lewis CEO. “The launch of NKU was very clearly about the fact that customers really understood our quality and service proposition, but weren't as clear on our pricing, especially after we made the pause two and a half years ago. So it was, it was definitively about bringing those customers back to understanding the incredible prices and value we offer. So it's definitely been part of our broader strategy around enhancing the value perception of our brand. In terms of the first week we've had it, it's really hit a sweet spot in terms.” What next? If John Lewis has committed to bringing back a much cherished part of the brand it begs the question what comes next? The main thing to look at would be the reintroduction of the Partner bonus which was last paid in 2022. As the company returns to profit and looks to the future the next logical step would be to bring back the bonus. However, when pressed on it Kankiwala stated that “the buzz is back” but refused to commit to it. “I think we as a team feel very confident about the full year number as well. But as you know, the decision is taken in March by the board. I'd love to [confirm the bonus reintroduction] actually, but the decision will be taken by the board in March. “But as you know from the team's presentation this morning and our numbers, we've had a very good first half. It's got really strong plans for the second half, strong cash generation that fuels that growth. And so, yeah, we're looking forward to an uplift in profits for the full year,” he said.

Why has John Lewis brought back Never Knowingly Undersold?

Retail Sector discusses why John Lewis has brought back its slogan, why it was dropped in the first place and what it could mean for the future

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