In many ways the two businesses are similar: both are household names in retail, selling everything from food to fridges to insurance; both have been in business since the 19th century and now have a turnover of more than £10bn a year – and neither answers to shareholders because they are owned by either their staff or members.
But that is where the similarities end. While the Co-op has just unveiled an annual loss of £2.5bn and is facing the biggest crisis in its 170 years, John Lewis last month announced a profit of £376m, paid out a bonus equal to eight weeks’ pay to every member of staff and is now gearing up to celebrate its 150th anniversary in some style.
“People say the co-owned model finds it difficult to move with the times but we have,” says Andy Street, chief executive of the John Lewis department store chain. “Just as one example of a mutual is finding life difficult, we are proving those naysayers wrong. We have learned and adapted over the years to new environments. We are able to adapt and surprise people and demonstrate our relevance.”
Street reckons there are two key differences between the two retailers that explain the contrasting fortunes of the Co-op and John Lewis – the way the boardrooms are run and the way each has chosen to expand. While the Co-op waded into the market to take over the Somerfield supermarket chain and the Britannia building society – deals that imported huge problems – John Lewis has pursued its own growth.
“We have elected directors, [independent] non-executive directors and [full-time] executives. That is similar to the model Lord Myners has suggested for the Co-op.
“The management of John Lewis has the ability to be decisive, quick and effective. We are accountable to our members, but it is the executives who take the decisions. We have also stuck to our core job. We haven’t gone for acquisitions. Our mission has always been not to be distracted.”
So while the debt-laden Co-op’s future remains far from certain, and its interim boss is warning that it needs wholesale change at the top to survive, John Lewis is planning a party and hoping to cash in on its anniversary celebrations.
The festivities range from turning the roof of its central London store into a public garden to a multi-media promotional effort that will attempt to build on the success of the store’s Christmas bear and hare advertising campaign. The cute cartoon characters were viewed 10m times on YouTube, created a buzz online and were high profile in-store. The retailer is aiming to put some of the same techniques into action to boost sales this spring and summer. “We will be deploying all those lessons,” says Street.
The planned events will kick off with a 90-second TV ad on May Day bank holiday, which will celebrate British history alongside that of John Lewis.
The historical theme will continue at the Oxford Street store in central London, which will host a re-creation of the single drapery shop on the same spot that launched the business in 1864.
Shops around the country will also celebrate historical periods and all will sell specially created products that revive some of the best designs from different eras.
John Lewis’s attempt to stir up a party mood is part of a wider trend among retailers try to make the most of shopping “occasions” amid evidence that shoppers are more willing to splash out around such events. While Christmas and Easter have long been red letter days, retailers have begun to make more of other dates on the calender such as Mother’s Day, and to develop their own events such as Black Friday, the US-born pre-Christmas bargain day which caused a stir in the UK for the first time last year.
Street says: “Of course we are trying to create an occasion. But it is much deeper than that. It’s about how our ownership structure has given us an advantage at a time when retail is changing. It’s about John Lewis’s contribution to the big national picture.”
He added: “This has been a very different business model for a long time. Just the longevity is a surprise and I think customers have some understanding of that, but not that deep. This is a great opportunity for us to draw attention to our history and to how we’ve been successful.”
Prosperous partners: how socialism made for high street success
John Lewis may have founded the company that bears his name, but it was his visionary son Spedan, who turned it into a staff-owned business.
The partnership started, Spedan Lewis said, “with an idea for a better way of managing business, so that instead of the many being exploited by the few, there will be genuine partnership for managers and the managed alike, all pulling together for their common advantage”.
Influenced by the ideas of the Welsh social reformer Robert Owen and the artist and designer William Morris, who founded the Socialist League in 1884, Lewis began to set up democratic staff councils in 1919 and first experimented with sharing profits at the Peter Jones store in 1920.
In 1928 he published a constitution with missives on everything from how to treat shoppers in lifts to the “never knowingly undersold” principle, which remains a key part of John Lewis’s business today.
The firm finally converted to a partnership and began sharing profits in 1929 after a decade of slow evolution – much of which was carried out without the knowledge of Lewis’s father, who ultimately controlled the business until his death in 1928.
The partnership structure kept the company strong during the Great Depression of the 1930s and the difficult 1940s. It continued to invest, expanding into new areas, which even included a zoo at the Peter Jones branch in Sloane Square, London, at one point.
Lewis also bought up the grocery chain Waitrose in 1937 and a string of regional department stores from his rival retail entrepreneur Gordon Selfridge just after the second world war broke out. Those deals helped the business survive when the key store in Oxford Street was bombed in 1940, putting it almost completely out of operation for eight years.
Over the ensuing decades the partnership had its ups and downs and was widely viewed as being outdated and out of touch by the early years of the 21st century as profits shrank. But the company began to modernise, rebranding regional stores under the John Lewis name, accepting credit cards and opening on Sundays. Today the company is seen as one of the British high street’s biggest success stories.