Is John Lewis about to pull itself out of the high street doldrums with this old favourite?

The owner of John Lewis and Waitrose says it’s on track for ‘significantly higher’ full-year profits after it slashed half-year losses. But what’s behind the rebound? Well, as Chris Blackhurst explains, one of the best-known slogans in retail is back and is helping fight off intense competition from online retailers

This time, the firm is adding something extra: ‘Never Knowingly Undersold on quality, service & price’ (PA Wire)

It’s hard to imagine a better advertising slogan than “Never Knowingly Undersold”. “Vorsprung durch Technik” and “Every Little Helps” perhaps would come close but really, the John Lewis mantra is out on its own.

Part of the proof was how the famous phrase stood the test of time, from its creation by John Spaden Lewis in 1925 until its dropping in 2022. Just shy of 100 years – remarkable. The fact the department store chain is resurrecting the three words barely two years later also speaks volumes. It’s missed the confident boast; more to the point, customers have missed it.

Like many strokes of genius, “NKU” (as it became known within the organisation) arose by accident. Lewis, the mutual’s founder, never intended it to be shopper-facing. It was aimed at product buyers in the Peter Jones store, exhorting them to secure the best prices from wholesalers. Effectively, it placed a cap on the retail price, and that, coupled with the firm’s internal target profit margin, meant those product buyers had to obtain the lowest price from suppliers.

Then, Lewis realised the phrase could entice shoppers, and it became the company’s catchphrase, until its scrapping as John Lewis wilted under the pressure of competition. Now it’s back.

John Lewis says it was not ditched for good two years ago, it was merely “paused”. That may be what it’s claiming today but then, it felt as though the move was permanent.

The brand was in a mess. John Lewis, for all its saintliness, could not escape the maelstrom engulfing traditional bricks and mortar retailers, department stores in particular. House of Fraser, Debenhams and others were all wilting under the relentless pressure from online, led of course by Amazon. No matter how hard they tried to cut their prices, seemingly there was always someone somewhere coming in cheaper and guaranteeing fast delivery.

Their own digital operations did a creditable job of fighting the flames but always the actual shops themselves were stuck, marooned like giant cruise liners on main shopping streets.

In results published today, John Lewis reported a loss of £30m for the first half of this year. This might sound bad but it represents a significant improvement in fortunes given it lost £59m in the same period last year.

The original genius of NKU is that it was about much more than price. The wording could be read as yes, referring to the cost, but also describing the quality of the product and the level of service. As a result, customers came away not feeling undersold.

Unfortunately, that cleverness only served to make it even more of an albatross around the corporate neck. Matching high-quality products with attentive personal service, while seeing off the likes of Amazon, was crippling. Something had to go.

It was not just the time-honoured mission statement. The much-vaunted mutuality that saw staff enjoying partnership status seemed to be under threat. The partners’ bonus award, regarded internally as the highlight of the year and keenly watched externally, was wiped out as sales and profits suffered.

Where John Lewis had been held up as the exemplar of how capitalism could function at its finest, with successive governments wishing to see the model replicated elsewhere, suddenly its flaws were cruelly exposed. Unable to sell shares to raise capital, John Lewis had no choice other than to close branches and make redundancies.

The brand appeared caught in a vicious circle of decline, as cutbacks saw a reduction in product ranges and the number of experienced shop assistants. The famed reputation for quality and service declined and the very existence of the organisation appeared to be at risk.

Management, trapped in the headlights, scrabbled around to come up with roles for the voluminous but increasingly empty stores. The once iconic John Lewis Partnership seemed to be moving away from its core activity of retail. Under its then chief, Dame Sharon White, who herself did not hail from a shopping background but from the senior ranks of the civil service, there was a growing blurring, of lacking a defining role, of not possessing a USP, so crucial to any successful label.

Now, under a new broom, Peter Ruis, there appears to be renewed vigour and sharper focus. He’s exploring options but is also determinedly taking the group back to basics, to what it did best, responding to pleas from staff and from customers, to concentrate on retailing.

He’s got the benefit of inheriting a stripped-down group – White having done the painful work of closing outlets. Now, as testament to where he believes John Lewis belongs, he is restoring NKU.

This time, the firm is adding something extra: “Never Knowingly Undersold on quality, service & price.”

In 2022, when NKU went, the department store chain based the decision on research showing that only 1 per cent of customers were deploying the promise to secure a lower price – they only had to point to where it was cheaper and John Lewis would reduce accordingly.

Now, it’s citing a finding from a recent survey of 5,000 customers, in which 75 per cent said a modernised version of NKU would improve their feeling of getting good value for money at John Lewis, as prompting the U-turn.

Whether it can remain true to the pledge remains to be seen. In one respect, little has changed since it was scrapped, sorry temporarily halted – John Lewis still has the same rivals. If anything, the discounting and retail bloodbath has intensified.

What is different, it says, is the arrival of AI. It has changed the landscape and enables the monitoring of prices on branded goods at 25 competitors, including Amazon on technology products, much quicker.

With the re-emergence of “Never Knowingly Undersold”, there is a spring in the John Lewis step again. Let’s hope it stays.