This year couldn’t have got off to a better start for retailer John Lewis: on the first working day of the year, it reported a 6.9% increase in like-for-like sales and online sales up by 23% for the Christmas period. In-store sales rose by 1.2%, but IT director Paul Coby sees the increase of online sales and healthy in-stores sales as a sign of the hallowed omni-channel retail that is a key part of the digital revolution rather than a decline in physical shopping.
“The great thing was that the stores and online grew,” Coby explains at the John Lewis headquarters a stone’s throw from Victoria station in London. “For three weeks up to Christmas and one week after Christmas online sales were 36% of our total sales. So it was an omni-channel Christmas.
“On Christmas day three-quarters of our customers were using mobile devices on the John Lewis website,” he says of the growing trend of receiving a tablet device and/or vouchers as Christmas presents, and customers immediately using the two to continue Christmas shopping into Christmas day.
“Mobile traffic has grown enormously as people want immediacy. As a result, we have changed the navigation and the checkout is better. Click and Collect saw usage increase by 60%.
“None of these results would have happened unless the back end of the business is well built in. So the distribution system and the warehousing have to be able to manage. It is the whole thing working together and that is the essence of the John Lewis proposition. Our offering is the integration of the shops, online, mobile, call centre and social, too.”
The John Lewis animated Christmas ad featuring a bear and hare from Aesop’s fables was loved and derided in equal measure. He chuckles at the YouTube parodies, remarking that they are the sincerest form of flattery.
A year ago Coby and John Lewis launched a new website, and Christmas 2013 was the site’s biggest test to date. “It is an amazing feeling,” he says of the solid performance by the site since launch.
“You test it and we worked very hard to predict the loads, and we did get some very big loads, especially with the clearance sale at the beginning of this year. The skill of the partners and operations people that have managed it cannot be underestimated.”
Strong sales, healthy revenues and reliable technology services are, of course, key benchmarks every CIO has to achieve. But what is also impressive about John Lewis is that it has focused on digital revolution as a strategy, while also retaining its reputation as a department store retailer.
Coby has been with the company since March 2011, having previously been CIO of British Airways (BA), and says he has been tasked as IT director with leading the digital transformation foreseen by managing director Andy Street.
“Before I was here Andy Street felt the tectonic plates of retail were moving and he developed a plan that was radical for John Lewis, and he accepted that this business will be revolutionised by technology,” Coby explains.
Street needed an IT leader that had been through the earthquakes of change before, and Coby’s experience at airline BA during the revolution caused by the launch of low-cost airlines such as easyJet, which don’t rely on global distribution systems, fitted the bill nicely.
Coby admired the foresight at John Lewis – not long ago it was considered inconceivable that consumers would buy online items such as a sofa or that online clothing sales would become the norm.
“We could have said lets re-architect everything, but instead they really wanted to go for the online business,” he explains. Interestingly, it is only now, having been with the organisation for three years, that Coby is starting work on the enterprise resource planning (ERP) platform. The strategy has paid off, too. In April of 2013 John Lewis reported £1 billion in online sales for a 52-week period, the first time the retailer had hit that figure.
“Hats off to the IT and commercial teams that our legacy systems did a billion in sales,” Coby says. “We got on with it and tested the business. Cutting over to the new website does nothing for your hair colour, though, he jokes. But omni-channel is not the future, it is here and now.
“What is the point in getting hung up on which channel the transaction comes from?” Coby is entirely right, retail is an experience we all want in all its different formats. Omni-channel benefits John Lewis, with customers unlikely to buy a large TV in-store today, but they will want to see the TV, talk to an expert and then order it online and have it delivered to their door and installed.”
Online sales are added to the results of the nearest retail outlet, so an online sale in Cambridgeshire is attributed to the Cambridge store. Coby explains this prevents any issues of online being treated as a separate business.
“We see a lot of our online traffic related to our stores and two-thirds of our customers are already omni-channel customers. We find ourselves out front, and the UK is the world’s leading market in terms of bricks and clicks retail. But it is no coincidence.
“The John Lewis advert I always refer to is the one that was jointly set in the 1930s and 2012, with a romance across time. That advert shows that what we at John Lewis are about never changes and the advert finishes on: in-store, online and mobile. It’s about taking the things we believe in and articulating them in the modern world,” he says.
Coby and the partnership have both the well-known catchphrase value of “never knowingly undersold”, but also VAST, which the IT director explains as: value, assortment, service and trust.
“We have a quarter of a million online products that are chosen, and as for service, well we all own the business and the value is absolutely there in the modern world.
“I have enormous respect for Amazon, but we never want to imitate them.”
Coby’s IT team has increased in the past year, with 60 new IT partners, 13 of whom were graduates and apprentices, and the organisation is planning for a further 50 recruits, including more graduates and apprentices in 2014. As well as recruiting the next generation of IT team, he explains that recruiting a head of IT relationships as soon as he joined was key.
“It is always the role that causes an issue in organisational charts, but it really works very well as head of IT relationships Sarah Venning is the focal point for the business to work with and it keeps everyone very rounded. It gives every directorate someone they can rely on for advice if there is a performance issue and to be realistic with,” he says.
As a mutual company, Coby and his team have also set out to engage the partners to define how technology will shape the organisation. In 2013 they ran PITCH – Partner Innovation Technology Challenge – at the Google headquarters in London, and partners from all levels of the organisation and from across the country pitched in ideas.
“Five apps were selected in a short list and the finalist was from a fashion advisor at our Cambridge store. Then via a hackathon with the IT directorate, we built in a day how the app works and tested it with customers. The final app is now in the hopper of projects for 2014. We want to do the same exercise again this year.”
John Lewispredominantly keeps its IT operations in-house and has an internal shared services operation, while systems integrators are brought in for major builds.
“The IT isn’t easy, but it is the business change that is the hardest to get right,” Coby says of the need to have ownership. The new website was developed with integration work from Deloitte, with Cognizant partnering for the order management platform, while OLR and TCS will be working on the new Oracle ERP programme he is currently preparing for.
“The model is smart sourcing. The reality is that the only people that understand the business that you are operating is you. You want the best brains and skills and the buck stop with you,” he explains.
“We have also significantly increased our capital investment in distribution and IT in the year, and this will change in 2014-18. I think it is lean when you consider all that we are doing. Investment has increased substantially in reflection of the retail revolution strategy.”
Among the sourcing changes has been the introduction of Google Apps for partners at the new range of John Lewis at Home stores. “People loved it for the flexibility,” he says. For 2014 a full refresh of the desktop estate is taking place. To ensure every user has the right tools for their needs, Coby and his team studied the users and created personas of the user types, from power users that need access to complex pivot tables through to those that only need access to some collaboration tools alongside the enterprise tools they use.
“The result is a much slimmer Microsoft Office estate,” he says. A new point of sale system is also going in.
Coby is a passionate and published expert on Roman history in the UK, but the focus and delivery of the digital needs, and the fact that when we met him he was on crutches from falling over while playing with his kids demonstrates that CIOs must always know the strengths and values of the past, but always be playing with the latest ideas.
2009 – present:IT director, John Lewis
March 2013 – present: Non-executive director, P&O Ferries
January 2009 – January 2011: Group CIO, British Airways
April 2005 – present: Chair of CIO Board, eSkillsUK
November 2000 – December 2008: CIO, British Airways