John Lewis’s journey to omni-channel retail
How CIO Paul Coby has transformed the UK retail giant’s IT to deliver joined-up customer service.
John Lewis Partnership feels it stands apart from its rivals in UK retail. Owned by its 91,000 employees, the business — whose outlets include John Lewis department stores, Waitrose supermarkets and related ecommerce sites — prides itself on a commitment to people and service that has endured since it was founded 150 years ago and won it countless awards for customer service and product quality.
And that’s a philosophy that Paul Coby, IT director for the John Lewis side of the business, says continues to inform the business’s wider strategy. “I see our task as taking what we value and translating it to a world that's being revolutionized by technology.”
When he joined the £10.2 billion ($17.4bn) company three years ago from British Airways, where he was CIO, Coby spent his first week behind a department counter and at one of its distribution centers. This gave him stark insights into the major IT transformation that would be required if the partnership were to continue delivering its legendary service levels.
The John Lewis electronic point-of-sale (EPoS) system had not been refreshed since 1990, for example. “Back then it was leading edge, but for 2011 it was utterly awful,” says Coby. “To make a basic card transaction took eight separate keystrokes on different parts of the screen. There comes a point when that visibly starts to affect your ability to serve customers well.”
Similarly, its disparate supply chain and ordering systems could not give operations staff the information they needed to track products and orders end-to-end across a single channel, let alone across its multiple channels of in-store, online, call center and mobile. “You can build [any number of] websites, but if you don’t fix what’s behind them — if you don’t fix your supply chain or understand where your orders are — you're not going to deliver a joined-up business,” says Coby.
Rise of the omni-channel customer
The challenge was made all the more difficult by the rapid pace of customer-driven change in the sector (see analysis of developments in the retail sector). “The way we all interact with each other, the way we interact with businesses and the way we shop have all changed fundamentally over the last decade and that change has been accelerating ever faster,” he says. As evidence of that, he says John Lewis’s biggest competitor today is not another department store but is Amazon.
That means that for typical customers, the process of researching products and making purchases often cuts across several channels. “Someone might use their mobile on the train to London in the morning to look at some products. They could complete the purchase, then opt to collect it from our Oxford Street store or have it delivered. Alternatively, they might spot something interesting and decide to drop into the store to have a closer look, then ring our call center later to order it,” he outlines. Coby says John Leiws estimates that at least two-thirds its customers are already omni-channel shoppers — that is, their purchase journey extends in some way (from research to payment) across online, in-store, phone and mobile devices (see Paul Coby's blog).
Anticipating this shift three years ago, and with the full support of John Lewis’s leadership team, Coby set three strategic aims for the business: Track, Know and Manage. As he explains: “We needed the ability to track every item from factory to warehouse, then on to stores, into the hands of customers — and back again if an item is returned. We wanted to know our customers not just in terms of what they’ve bought or are buying, but (with their permission) what they’re likely to buy in the future. Then we needed to manage everything across all the different channels.”
Today, he says, the strategy is progressing well: “We’ve put in a completely new EPoS system which rolled out last year across all the stores. We implemented a new web platform which went live in February last year. We’re also putting in place a new order management system that covers all orders irrespective of whether they’re made in stores, online or via mobile. And we’re replacing our previously siloed supply chain systems with a new ERP system.”
But he is aware there is still some way to go. “Competition means things are always moving. What you do one year everyone else is doing the next. We invented ‘click and collect,’ for example, now everyone’s doing it,” he says. But in terms of getting in place the appropriate foundations for the future, he estimates the transformation program is approaching the halfway point.
Injection of innovation
Managing such fundamental change has been particularly difficult in terms of the human factors. Not only do staff have to get used to new systems and ways of working, but IT operations staff have to support a much bigger estate. “It’s been very challenging, but I believe it’s getting us where we need to be. We’ve won Retail Week’s Omni-channel Retailer of the Year award for two years running, for instance,” says Coby.
But keeping up with customer expectations is only part of what retailers need to do to thrive in the retail landscape of tomorrow. They also need to confront digital disruption. To that end, Coby is particularly excited about John Lewis’s tech incubator venture JLAB; from 163 applicants, five innovative retail start-ups have been selected to receive funding, premises, support and mentoring. “I’d like to see five great companies turned from uncut diamonds into the real thing,” said Coby.
He adds that the initiative chimes completely with the long-held values of the company. “It is not just about the commercial things, but about how we interact with society and the community,” he says. “Of course, if we also get some fantastic products and a great return on investment, that would be marvelous too.”
• Paul Coby was speaking at Ovum Industry Congress 2014 in London.