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John Lewis Hopes a Fashion Fix Turns Around Plummeting Profits

In the days when Ikea multi-packs and cheap Zara dresses were a mere twinkle in the eye of the British high street, John Lewis formed the rock-solid foundation of middle-class shopping—a purveyor of fridges and televisions, duvets and school uniforms, and everything else needed to keep life chugging along.

But as a reaction to the 2017 plunge in profits, the revered department store has thrown itself into the womenswear fray in an attempt to become “a leading fashion destination,” according to Christine Kasoulis, the retailer’s fashion buying director. Previously, the store’s clothing floor has sold in-house basics and veered away from anything too ‘fashiony’, but from next month, John Lewis will be launching a 500 million pound ($640 million) fashion brand and, alongside it, revamping its flagship stores to include rooftop bars, pop-up cinemas and yoga centers.

John Lewis has been an integral part of British retail for more than a century. The first store opened on Oxford Street in the spring of 1864 and was based on the principles of, “value, assortment, service and honesty.” While the retailer has no doubt joined the ranks of ‘British national treasure’, it has never been seen as a modernizer.

Enter Paula Nickolds, the first female managing director of John Lewis, who has worked her way up the ranks from graduate trainee. She became MD in 2017 and has since made it her mission to reinvent the concept of the department store.

“I inherited a business in really good shape, but we need change in this pretty challenging time,” she said in an interview with the BBC.

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Brick and mortar shops around the world are struggling to attract customers in the e-commerce era, and everywhere from Tokyo to New York, department stores are being forced to invent ever more alluring tactics to woo customers away from their laptops. But in Britain, these structural challenges are only part of the problem, as retailers also grapple with the devaluation of the pound following the Brexit vote, and the upsurge in prices of internationally made goods.

Last year, it looked as if John Lewis was following in the footsteps of the beleaguered Marks & Spencer, which has seen its share prices dramatically drop over the last few years. John Lewis had fared better than its rival until 2017, when its profits plunged by 77 percent to 104 million pounds ($133 million).

Rather than downsizing, the company has opted for the most important—and expensive—makeover in its 154-year history. In September, it will have a shiny new name: John Lewis & Partners and its traditional racing green livery will be replaced by a minimalist black and white logo. And over the next three years, it will inject 500 million pounds into “service innovation” and the “revitalization of product.” And it’s the under-40s who will be targeted.

In order to lure in this new demographic, the department store chain is set to launch an overhaul  that will see it open rooftop bars, pop-up cinemas and yoga centers in its once famously staid shop floors. There will be events and classes, personal stylists and front-of-house concierge services. It will also install a shoe room in partnership with Kurt Geiger to rebrand itself as a fashion hub.

But to attract customers away from stores with the ‘cool factor’, John Lewis will also have to play on its reputation for exemplary service.

“John Lewis have chosen to double down on areas of competitive advantage and in particular their customer service reputation,” said Rhiannon Thomas, a senior consultant for AT Kearney in London. “Womenswear is extremely competitive but there is a potential to use it as a category to bring that customer service element to forefront of the shopper experience. To be successful they will need to ensure the proposition offers a combination of online and offline service elements, high quality ethically sourced products and seamless fulfillment.”

Additionally, the retailer is building a 500 million pound fashion business, of which half will be exclusive product and half private label. The new John Lewis & Partners women’s wear collection will be aimed at everyone from ages 30 to 70 and will include 300 pieces, including cross-body handbags, chunky knits with contrasting panels and an array of silk-crepe tops and dresses. In anticipation of the roll out, the company has increased its designers by 50 percent. Prices range from a mere 10 pound ($12.80) T-shirt to a 250 pound ($320) cashmere coat. Alongside their own brand, John Lewis will also display other fashion labels in store, including an exclusive line with J.Crew.

A quick glance at Marks & Spencer’s fortunes shows the pitfalls that can result from attempting to appeal to an entirely new demographic. However, critics argue that John Lewis is not attempting to do this.

“John Lewis has always been about attracting middle-class families,” says Tamara Cincik, the founder of lobby group Fashion Roundtable. “Whilst the changes appear to be adjusting John Lewis’ target demographic, far from that, they are simply reinforcing the popularity of their brand, with the younger end. The longevity of John Lewis’ success, through economic crises and changing consumer preferences, has always been centered around brand loyalty. By seeking to reach out to more of their customer base, and new entrants into their bracket, they are doing what they have always done.”

Middle-class needs aside–ultimately, in the battle of the British retail giants, only time will tell if the solution to the trials of e-commerce and Brexit is upsizing, downsizing or a radical fashion-forward overhaul and a sprinkling of rooftop bars.