As opposed to a lot of other retailers, John Lewis does not majorly reply on suppliers as most of the sales come from own brand products. This shows that it mainly purchases raw materials and not finished goods which is an advantage for profits (John Lewis, 2012). John Lewis is such a large brand and company with a large turnover that suppliers want their products on the shelf as they know this will give them a large customer base. Not only can you purchase big branded products through John Lewis such as Armani, and Ted Baker but the sales that are on at different times of the year meaning it can sometimes be beneficial to purchase via John Lewis rather than directly from the supplier which is favourable for Margins.
Degree of Rivalry…show more content… John Lewis managed to pull through its financial crisis in 2000, but it is now facing a slow profit growth. This was effected by the economic crunch that started in the USA and spread to the UK (ABC News 2008). As the earning for consumers decreases they are able to spend less and start to shop around for cheaper alternatives across the market, as can be seen by the recent rise in Aldi and Lidl profit increase. John Lewis is in a strong position that it will not be easily removed or even overtaken by its rivals. However they could do with being more cautious towards its weaknesses and bad publicity which could give it a bad reputation. John Lewis should continue to spread in its online market and the out of the box thinking as this is something that surely attracts the younger generation. Putting more back into the society and being more environmentally friendly will make John Lewis stand out even more from its…show more content… 4 – Porter’s Generic Theory
Table 6 – Porters Generic Theory analysis
As per the findings from internal analysis this employee-owned business entails business success by delivering ‘right experience to each customer’. On the surface of things, one can assume that they have a ‘cost-leadership strategy’. Its promise of ‘never knowingly undersold’ is popular amongst its consumers where if a customer finds a product cheaper elsewhere or on promotion, John Lewis will match the price.
However, John Lewis targets a particular niche market or ‘focus strategy’ where they understand the needs of their particular types of customers and build strong brand loyalty. The department stores are filled with wide range of high quality products. This avoids the consumer from shopping around and due to the broad choice offered in store, it means that average spend per store visit is higher compared to its rivals. That makes their store more productive and economies of scale is achieved through offers. This is a different formula to most other retailers but in the end the result is the same with increase in sales and profitability, and is line with its strategic aim of growing