John Lewis rental homes? They could be on the way as the partnership looks for new business

Will the back end of the 2020s see people kitting out their John Lewis rental home’s garden with plants bought at a John Lewis horticultural centre before attacking the lawn with a rented mower from John Lewis Equipment Hire?

That’s the tantalising prospect set out in a letter to the partnership’s staff from Sharon White, who became chair earlier this year. It updates progress on her strategic review and outlines a number of new businesses being investigated.

The heavy weather on planet retail has recently knocked even this high-street stalwart off its feet, exacerbated, of course, by the pandemic. The bonuses paid to staff, as the owners of the business, have evaporated. Store closures have been announced. Job cuts too.

There’s also been a very un-John Lewis-like level of turmoil in the upper ranks. While that’s surely down to the change of regime, it has contributed to a very un-John Lewis-like level of uncertainty among the people working there.

The letter is an attempt to get back on the front foot by White, to show the rest of the partnership that she and her revamped top team are on the case.

The main ingredients in White’s cake are plans to cut costs, invest more heavily in the online operation, play to the business’s strengths (home and nursery at John Lewis, own label product at Waitrose). The new businesses are the icing.

Ironically, the first and least radical proposal is the one I’d be most sceptical about: financial services.

John Lewis is already involved (credit cards, personal loans, insurance etc) but wants to push more heavily into it. This is something that lots of retailers have tried to do with less than stellar results. It’s not easy to see how John Lewis is going to succeed where others largely failed.

The company is also looking at horticulture and rental and repair as potential new areas. But it’s the homes that have got people talking. They’ll be created through repurposing some of the existing estate, unviable stores and the like, and making better use of the partnership’s land bank.

Rental housing, including affordable housing, is something a number of businesses have been moving into because demand is strong and it offers predictable and reliable returns at a time when they’re hard to find.

Critics, however, will tell you that commercial operators are often focused on the wrong kind of housing – shared ownership in the case of, say, Legal & General – in preference to what’s most needed. That would be social housing: rental property at rates people can afford rather than what’s demanded by the market.

John Lewis isn’t so much a business as it is an idea. It enjoys a surfeit of trust so its involvement in the sector – if it happens – is something people would probably be quite comfortable with.

But there is still a financial imperative behind the move, which could run slap bang into the same sort of issues.

The scenario I laid out at the opening to this column remains unlikely. These are early days. There’s no detail to pour over, no partners have been selected. The ideas in White’s letter are those she’s chosen to focus on from a large number of suggestions submitted by staff. It’s unlikely that they’ll all come to fruition, and even those that do mightn’t work. Which is fine, by the way. That’s business, and credit is due to White for rolling the dice and engaging the imaginations of her and her staff.

In retail it’s very much a case of experiment and adapt or die. It speaks volumes that the letter emerged on the same day that Argos brought the curtain down on its catalogue, ushering in a predictable wave of nostalgia from people who scarcely used it but had fond memories of when they did. Trouble is, Argos is up against Amazon. Owner Sainsbury’s therefore needs to be able to update the range, and its prices, by the hour. A glossy, and expensively produced, catalogue was getting in the way.

The John Lewis that ultimately emerges from the review – which is ongoing – will also be a much changed animal. But there should still be a John Lewis, owned by its staff and with bosses’ pay linked to their pay. That has to be welcomed.