Three things that differentiate Target and John Lewis
Over the last years department stores have seen varying levels of success. Many of the traditional department stores have faced difficult times as the online and discount channels have grown. Then came the pandemic…
However, some department stores have fared better over the last years. Two department store chains rise above the rest with their rigid response to the pandemic: John Lewis and Target. Target has been one of the best performing retailers overall during the last five years.
Target’s revenues have grown by 50% over the last five years. Same time Department store market has declined -4%.
Why John Lewis and Target have performed so much better?
Three main reasons come to mind when thinking about the differences between Target and John Lewis to other department stores.
Broad assortment
Price positioning
Online
Assortment and pricing
Target relies on five nearly equal segments (Beauty, Food, Home, Apparel & Hardlines; each ranging from 16% to 20% of revenue) that balance out each other’s risks. Additionally they provide Target with broad enough assortment to cater for the majority of customer’s needs. This became highlighted during the pandemic, when customers did not want to visit many stores, but instead wanted find as much as possible in one place.
John Lewis has also been able to three big and almost equally important segments in their department stores. However, John Lewis has food as a separate business unit, which accounts for almost 2/3 of the total sales. Food was the category became really important during the pandemic.
Traditional department stores have focused mainly on fashion and accessories and sometimes also to home and decor products. This is far from the golden days of the department stores, when they catered to every need a customer might have.
Besides broad assortment, especially Target, but also John Lewis has worked extensively on their Private Label ranges. Target has built multiple billion dollar private label brands and the company reported a robust $30 billion in own brand revenues in 2021. This has ensured a good value proposition for the customers.
Online
Besides it’s food business, John Lewis has really excelled online. Already prior to pandemic the department store business had built the online arm into representing 40% of the revenue. After the pandemic online 67% (having peaked at 75%) of the department store revenues. This enabled John Lewis into the rapidly growing online channel.