Comment: Age is no barrier if you have a strong brand

Published on 14/09/2012 02:46

JOHN Lewis, the department store group, and fashion retailer Next have bucked the recent high street gloom with 60 per cent and 10 per cent jumps respectively in halftime profits.

It is welcome change for a sector not without its problems and a trend that forces others to ask how they are keeping the tills ringing.

It is not that John Lewis and Next are immune from the chill winds in retail. Next chairman Lord Wolfson and his John Lewis counterpart, Charlie Mayfield, have warned of a slowdown in the sector.

Next’s August and September sales were disappointing according to the company, while John Lewis warned its impressive rate of growth – with revenues up 8.6 per cent at £3.9bn – was unlikely to continue due to an ongoing investment programme.

But even so, both companies have been two of the best performing retailers amid severe high street headwinds for it to be purely good fortune.

Crucially, both look to have benefited from widening their customer demographic. John Lewis is traditionally seen as having a south of England, middle-aged, above average income customer base. This is partly debunked by the resilient performances in its north of England and Scottish stores.

But industry experts say the department store group has widened its appeal to attract 25 to 35 year olds, with a strong fashion and technology offering, typified by the new iPads and Kindles.

An increasingly strong childrenswear offer also makes John Lewis a destination shop for people having babies in their early 30s, so it if far from just the grey pound that is keeping the company ahead of the pack.

Having said that, while extending its age appeal John Lewis can always fall back on that historic 35 to 45 year old market when customers mostly on more than the average wages furnish homes and shop at the efficiently run Waitrose supermarkets.

Next has performed a similar demographic trick. At one time the group specialised in clothing those aged between the late-20s to 40s. It was smart workwear for adults.

But Next Directory, the catalogue/internet offering, is a star performer for the company and has allowed it to gain both younger and older shoppers. Like John Lewis, it has branched out successfully into kidswear.

Whatever consumer challenges lie ahead, here are two strong brands with more monied customers than many of their rivals. That them resilience in a downturn, while being catfooted enough to reach out beyond their core customers.

Consultant ban is surely the way forward

THE banning of remuneration consultants from meetings over executive pay between a leading institutional investor and the companies it invests in may set a beneficial precedent.

It is to be hoped other powerful shareholders follow the lead of Legal & General Investment Management which owns 4 per cent of the stock market so can be an influential force.

Who can argue seriously with LGIM’s argument that the head of a company’s pay committee should be able to explain remuneration, including bonus triggers, without the need for an external adviser riding shotgun?

If not, the remuneration committee members risk looking as if they are patsies just prepared to nod through complex formulae largely put together by the external heralds of the “going rate”.

The suspicion remains that remuneration consultants muddy the waters around the whole issue of executive pay.