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John Lewis has, more or less, called the end of the “experience economy”. This is a big deal, according to the retailer: “a profound and exciting shift”. In its place we have the “moments economy”, and John Lewis — middle England’s middling retail home — is determined to be the “world’s first moments-based retailer”.
This is obvious marketing guff. But get past that and there may be the kernel of a sensible strategy.
You might not have noticed you were living in the experience economy. But that’s broadly the theme of the millennial era: that what consumers have sought out is experiences to go alongside their goods and services. The shift has gone hand in hand with the rise of Instagram and is not going away.
But John Lewis’s pitch is that while the noughties meant spending on events like big holidays and festivals, shoppers are now “looking to bring that same joy to all the moments of our lives” — and will want to spend more on everyday things to make that happen.
This is in part about John Lewis needing to find a new slogan after jettisoning its “never knowingly undersold” price promise earlier this year. The pledge was increasingly meaningless, because it excluded own brand goods and online-only retailers, and expensive, as high street rivals turned to discounting to keep shoppers coming in and John Lewis was forced to match them.
But it is also about retailers needing to find a new model. The experience economy has not been kind to the high street. Optimism that shops could reinvent themselves as experience hubs has not been enough to offset the high property costs.
The “moments economy” might be better summed up as an opportunity to sell consumers more small stuff more often. John Lewis has already acknowledged that it isn’t enough just to be there for life’s big moments. That was one implication of the target announced in 2020 to diversify further into areas including housing and financial services, where it wants to generate 40 per cent of profits by the end of the decade.
The fact that John Lewis isn’t abandoning that strategy indicates the rise of the “moments economy” isn’t as much of a moment as John Lewis is making it out to be. But it is still an opportunity.
At a time when UK consumers are likely to cut back on big-ticket items, focusing on capturing more small spending makes sense. It is an extension of the lipstick principle, the thesis that consumers tend to look for affordable treats when the going is too tough to splurge. That is doubly true given the decades-long fall in home ownership rates. The rental generation is less likely to commit to large outlays on furniture that may not fit when they move to a new place in 12 months’ time.
The partial reversal of the pandemic-era shift to online shopping is also in John Lewis’s favour.
Companies such as Shopify, which bet big on a generation-defining change, are no longer ascendant. Years of declining profits even before the pandemic mean John Lewis has already been forced to do the hard work of shutting stores and stabilising its finances (though there could always be more to come). It now has the mass-market department store market almost entirely to itself.
The partnership’s retail proposition is already improving. Its app, website and stores are all getting better. But the jury is still out on its main answer to the ecommerce challenge to date: a greater focus on own brand goods and a new budget “Anyday” range.
The risk it takes is that it offers quality that is no better than budget retailers like Ikea but at higher prices. It may also lower its market standing in the process — and expose itself to fierce homewares competition from the likes of Dunelm and Wilko.
Interim results next week will provide more detail, but there are already indications on the Waitrose side of the group that the revamp is not panning out quite as planned. The grocer has lost sales and market share while rival M&S’s food offering appears to be resurgent.
There is probably no such thing as a moments economy. Shopping more for everyday moments sits awkwardly with the sustainability ethos of the group. But that almost doesn’t matter as long as the concept of the moments economy provides a rationale for the business to rally around and refocus.
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