​‘JLP and Morrisons’ green and community drives provide platform to rebuild’

Big retail names such as John Lewis and Morrisons were “nursing collapses in profitability”, broadcast news bulletins reported.

Car and aero-engine manufacturer Rolls-Royce was facing a “crisis” of its own after suffering a near-£4bn annual loss.

And Heathrow Airport reported that passenger numbers in February fell to their lowest level since England won the World Cup in 1966.

Against such apparent doom and gloom, the leadership teams of both John Lewis and Morrisons were bullish in their conversations with the media.

David Potts, chief executive of the big-four grocer, went so far as to suggest he would “wear the halving of profits as a badge of honour” given the time and money – some £290m in Covid-19 costs – that Morrisons put into feeding the nation.

Despite those additional outgoings, the food retailer recorded a profit before tax and exceptional items of £201m in the year to January 31.

“Frankly, we could have made no profit and it would have been a result,” Potts insisted.

John Lewis might not have had the same luxury of remaining in the black, reporting an admittedly eye-watering £517m loss for the year ending January 30.

But Dame Sharon White is adamant the department store and grocery group can bounce back from what she described as the “economic earthquake” of the past year.

“There has been a marked shift in consumer mindset as shoppers gravitate towards companies that are seen to do the right thing for their staff, for their communities and for the environment”

Part of the confidence exuded by both retailers stems from the belief they have in their respective corporate purposes and the desire among consumers to spend their money with them once the coronavirus pandemic subsides.

There has been a marked shift in consumer mindset during the crisis as shoppers increasingly gravitate towards smaller independent businesses and companies that are seen to do the right thing for their staff, for their communities and for the environment.

As one chief executive neatly encapsulates it: “Every pound spent by a customer now is a vote for that business, its values and its purpose.”

According to Accenture, 60% of consumers have been making more environmentally friendly, sustainable or ethical purchases since the start of the pandemic. Nine out of 10 of those said they were likely to continue doing so post-Covid. 

With that trend expected to persist long after the health crisis ends, it is the businesses that reposition their operations and their brands most quickly and effectively that will be best equipped to rebuild sales and profitability most robustly.

It was therefore no great surprise that the themes of sustainability and an enhanced focus on helping local communities peppered the annual results of both John Lewis and Morrisons.

Underlining the seriousness of its commitment to those areas, Morrisons has not only added a fourth pillar, ‘Sustain’, to its existing ‘Fix, Rebuild, Grow’ strategy, but recognised ‘environment and community’ as a key stakeholder in the business alongside customers, colleagues, suppliers and shareholders.

Potts said ‘Sustain’ “underpins everything we do” and spans three areas: competitive improvements that are additive to sustainability goals; an “unwavering” support for the communities in which Morrisons operates; and reducing its environmental footprint.

Earlier this week, Morrisons pledged to be completely supplied by net-zero-carbon British farms by 2030 and said today it would stretch its targets in areas such as reducing carbon emissions, cutting food waste and preserving natural resources by “reducing, reusing, recycling”.

Potts says Morrisons’ vertically integrated model leaves it “uniquely placed” to deliver on its net-zero pledge and he is determined for the grocer to “trailblaze” in that area.

Morrisons vowed to make “a positive impact” in all local areas it serves, help customers “live healthier lives” and offer local people “a great place to work”.

As signals of intent, Morrisons has already increased hourly pay for every store employee to at least £10 an hour and has launched new Nourish lines – healthy products that carry an approved health claim, such as ‘good for your immunity’, on their labelling.

The John Lewis Partnership’s results carried similar sentiments. The climate emergency, the retailer said, “presents an even greater challenge than the pandemic”, meaning “now is the time to accelerate efforts to improve sustainability”.

Waitrose has already been recognised by Greenpeace as the supermarket doing the most to tackle single-use plastics through its in-store Unpacked initiative and the grocer’s boss, James Bailey, wants the upmarket chain to “take a disruptive and leading position” on sustainability.

”As we emerge from the pandemic, these things matter more than ever. Progress against these stated goals will be expected, measured and scrutinised by an increasingly ethical customer base”

All raw materials used in John Lewis’ own-brand products will be sustainable or from recycled sources by 2025 and the department store business is also eyeing further progress in its reuse and recycling drive, building on its furniture rental trial with Fat Llama.

There was once a time, only a few years ago, when such pledges made for a good headline – some decent PR for a business, but little else.

As we emerge from the pandemic, these things matter to customers more than ever. Progress against these stated goals will be expected, measured and scrutinised by an increasingly ethical customer base.

As shoppers actively seek out retailers that conduct their business with a clear purpose, they will vote with their feet and their wallets. Retailers must put the environment and their communities front and centre if they want to secure a place on the modern consumer’s ballot paper.