The new boss of John Lewis and Waitrose has formally launched a “bold” plan to revive the retailer by selling far more online at lower prices in a bid to achieve £400m in profits over the next five years.
The department store chain, which is loss-making, will replace its Never Knowingly Undersold price promise with a new scheme next year.
The group said there will be “new entry price points on all categories” as hard-up shoppers increasingly hunt for bargains.
The employee-owned partnership aims to become less reliant on stores by doubling down on affordable housing and financial services, as well as branching out into garden centres. It plans for almost half its profits to come from non-retail by 2030.
Nina Bhatia, the director of strategy, stressed that the two businesses should make “sufficient, not maximum, profit” and have a green, sustainable agenda, in line with traditional John Lewis values. Its unique structure makes it difficult to raise cash by selling shares or securing external investment.
Dame Sharon White, chairman of the mutual, said: “We’ve seen five years of change in the past five months ... our plan means the partnership will thrive for the next century, as it has the last.”
John Lewis declined to say if there will be more job losses or store closures as it plans to save £300m a year by 2022 by simplifying the business and reviewing agreements with suppliers.
Dame Sharon, who has hired a clutch of senior executives to deliver the plan since she joined, said: “Part of the plan is we want to become a much more efficient and leaner business, and that is going to take a number of forms. But we’re not talking today about job cuts."
The directors said that as it expands beyond retail there will be scope to hire more staff.
“Making these savings is crucial to free up money to invest and to deliver our plan,” the company said.
John Lewis aims to pay a bonus again when profits exceed £150m. It scrapped the staff bonus after posting a first-half loss of £635m last month, but the second half that includes the Christmas rush is usually the most profitable.
Total net debt was £2.3bn.
The partnership will invest £1bn in online and to improve shops over the next five years.
The plan is for the department store chain to generate up to 70pc of its revenues from its website.
Sister business Waitrose, which enjoyed a boost from the surge in home deliveries since the pandemic, will expand delivery capacity beyond 250,000 orders per week, up from 55,000 before the pandemic.
It already has 190,000 weekly slots.
By contrast, the new owners of Asda say they will invest £1bn over the next three years, while the German discounters Aldi and Lidl spend about £500m a year on growth.
John Lewis will also become a major landlord, aiming to build rental homes at 20 sites either above or beside stores or on other land it owns.
It has already earmarked two sites in Greater London where work could begin next year, but declined to give more details.
The group also plans to offer more virtual services and relaunch its home department to make it more accessible.