John Lewis - Threat Analysis
| Management of Risk | | Excellent (1) | Sufficient (2) | Limited (3) | Poor (4) | RiskLevel | Significant (3) | -Easy for JLP customers to ‘switch’-This ability to ‘switch’ for consumers is mitigated by JLPs unique approach to their customers – by providing real service, and service-incentives within employees, they create a shopping experience that cannot simply be replicated in any other store-CULTURE creation within their stores makes switching (with the same level of service) very difficult for consumers.-Relatively low share of retail market represents a real threat in terms of ‘weight’ in the market – threatens expansion-JLP has built more stores in past year, compared to any other year, despite limited capital – clear focus on expanding, excellent expansion in the food&drink sector, which is clearly very affluent (Tesco net profit over £2bn). | -Substantial investment into new stores, during recession and reduced consumer spending (*)-Extremely low profit margins, yet partners still received a 14% bonus, with a figure higher than net profit.-Liquidity is certainly a concern for JL, with a current ratio of 77% and gearing of over 25% - holds financial risk-JLP have pursued an aggressive expansion strategy in order to take advantage of their strong position, prior to any ‘boom’ or exit from the recession-Despite the risk, equity outweighs debt and now places them in a competitive position for the future-High partner bonuses mitigate the extent to which low margins create stakeholder concerns – after all, bonuses replace dividends in JLP-Significant gearing creates short term risk, however, essential due to the long lead time from store authorisation, to store completion | | | | Moderate (2) | | -Current move towards ‘own/value’ brands, especially within Waitrose risks contradicting their value of high quality-Mitigated by consumers’ ability to still purchase premium products – actually, this strategy will attract new customers to JLP – however,