Department store rivals fail to compete with John Lewis’s online strengths, reports Verdict

John Lewis will extend its ecommerce lead in 2014 as the UK online department store market frontrunner, according to Verdict’s Department Store Retailing in the UK report.

The retailer’s multi-channel proposition has propelled growth, and with Verdict forecasting the online channel to grow by 71.9% in the five years to 2019, it is in a prime position to capitalise on consumers’ growing spend, said researchers.

While opponents have work to do to catch up, it is John Lewis that will be under pressure as players strive to emulate successful elements of its multichannel offer.

Verdict forecasts the online department store channel to grow by 240.7% in the five years to 2014, driven by players such as John Lewis and House of Fraser setting the standard for convenience, fast delivery and website functionality.

John Lewis’s investment in the channel – with its new distribution centre Magna Park 2, instore facilities such as click & collect, collection facilities across Waitrose branches and the introduction of Collect+ – has allowed it to become market leader and win Verdict’s Customer Satisfaction Awards in 2014 for overall online retailer – beating the likes of Next and Amazon.

With such strong investments, Verdict now forecasts John Lewis’s share of the online department store market will reach 41.0% in 2014, 15.2 percentage points higher than M&S and 27.0 percentage points higher than Debenhams. With gross online sales up £184m to £1.1bn in the year to 25 January 2014, the channel continues to form an intrinsic part of its operations, accounting for 28.1% of its sales.

Verdict said John Lewis’s sales growth and market share supremacy are boosted by its strong online electricals, homewares and furniture propositions, targeting a wider customer base and enabling it to be a destination across many product categories – while its rivals place more focus on clothing, limiting their reach. However, there is ample opportunity for these players to better convey their authority in this sector and grow destination appeal, through wider choice and product exclusives, researchers said.

John Lewis’s contemporaries have also invested considerably in their multi-channel propositions, and have achieved substantial sales growth as a result.

House of Fraser has been an innovator in the online department store market with late click & collect and delivery cut off times and online size advice in clothing & footwear – aiding its online sales to grow by 41.0% in its financial year ending 25 January 2014, and lifting its market share by 0.6 percentage points in just one year.

M&S has the potential to close the gap with John Lewis in future, providing its clothing sales rebound, particularly with its re-launched platform, though it must further exploit its large convenience store network. However, despite these initiatives, John Lewis remains ahead and continues to display its trustworthiness.

With the online channel forecast to account for 26.7% of all UK department store spend by 2019, up from 19.4% in 2014, John Lewis remains in an enviable position, and is likely to maintain its competitive advantage as it continues to satisfy shopper demands for added convenience, said Verdict.

However, it will remain a challenge for the retailer to grow further and widen the gap from the likes of M&S and Debenhams, as they continue to invest in their propositions and are now able to learn from John Lewis and emulate its successful online elements – which will place pressure on the department store in years to come.