The John Lewis Partnership today announced plans to revolutionise retail by updating the business model of their 27 department stores across the UK to catch up to the Internet age.
As of the 31st of August, the stores will distribute their products for free, while advertising will be the sole income for the stores. The goods themselves will act as loss leaders to entice the consumer to the store. Advertisments will be placed on walls, floors and the soon to be erected stands decicated to displaying both static and video adverts. Approximately 70% of existing shop floor space will be converted to advert space to increase the ratio of income generating floorspace to attraction only floorspace.
The move is stunning, but not without precedent. The burgeoning success of “Web 2.0” strategies as successfully employed by such trend-setters as Facebook and Twitter has caused many business experts to predict its appearance in the more traditional world of bricks-and-mortar stores.
Facebook was valued at approximately $15bn dollars when they raised capital by selling stock to Microsoft; Twitter’s value was said to be $500m when Facebook attempted to buy them with an offer of that value of Facebook stock in a move that many now discredited experts would have described as trading clouds only two decades ago. Both have done so by concentrating on finding audience for adverts rather than the clearly defunct approach of having a product that customers are willing to pay for.
“We have to move with the times,” said Bertram Yardy, the manager of the Newcastle branch. “These days success isn’t about profits or sustainability. The number of customers you attract defines your worth as a business and we want to tap into that.”
What sort of adverts will be displayed? “The plan is to have a better quality of advert as well as a greater number. For example, we have one - you’ll love this - where you have to try to swat the fly. If you do, you can win prizes! I think it’ll really add to the experience of shopping in a John Lewis store and will certainly augment the product we have in a way that we just couldn’t do before with sales staff and tasteful presentation,” Yardy said.
The partnership aims to have more than tripled the number of customers coming into their stores by 2011. While the revenue from advertsing will be unimportantly less than that of selling products, Yardy feels that a smaller profit from a larger number of people is an acheivable goal. “Free is such an enticing concept, and getting something for free will make people want to spend money on the products we’re advertsing,” he explained.