Assignment Sample on MS60057E – Business Research Project
Introduction
Background
The research project is focusing on analysing the topic of John Lewis fashion sector which is a UK retail brand and has partnership departmental stores running across the globe, founded in 1864. The John Lewis Partnership has clothing, watches, furniture, food, direct financial services, jewellery, and many more as product lists (Sammour, 2020). Here in this project report, the Fashion Brand of the organisation will be considered to understand the current situation of the market Post first wave covid-19 pandemic. The company was found integrating with various fashion brands with heavy discounts for enhancing sales.
Rationale
The main reason to choose the topic is that the world has witnessed a heavy decline in the fashion sector due to the pandemic and the distribution, production level was infringed with the heavy crisis. But to restore the loss and damages the company of the fashion brands has offered various discounts and integration strategies were adopted by the fashion organisations (Black, 2020). Therefore, these research project will be based on the certain aspects which will help to understand the strategies and the impact of the discounts over the company persuading to seek the attention of the customers.
The company has brought recently as a part of the integration strategy almost 50 new fashion brands from start-ups to independent street stores favourites items trying to transform the fashion street style across the UK (Hissa, 2021). To bring changes into the wardrobe for increasing the sales and satisfying the customers with trendy stuff the company has to modernise the clothing sectors after the first wave. The first wave has let the company suffer falling into a 1.8% reduction in total sales in 2020. Henceforth, the research will be effective for analysing the various strategies adopted by the retail brand, John Lewis to satisfy the aim of the report.
Aim
The main aim of the topic is to find the sales generated after the various heavy discount strategies adopted post-pandemic by the John Lewis clothing brand.
Research Objectives
- To identify the various integration method adopted by fashion brands and the impact of the strategies adopted post-pandemic.
- To identify the number of sales that increased or decreased after the implementation of the integration by the John Lewis clothing brand.
- To identify the impact of the heavy sales offers infringed upon the clothing to attract the customers by John Lewis.
- To suggest John Lewis fashion sector about the strategies for overcoming the future crisis.
Research question’s
- How business integration method has helped fashion brands to benefit post-pandemic crisis?
- What is the status of sales of the John Lewis fashion brands post covid-19 after the integration strategy?
- How does the heavy discount policy has impacted the company’s sales after the first wave of the Covid-19 pandemic?
- What will be the suggestion as per the research analysis of the topic?
The whole project will start with the literature review explaining the current issues and the impact of the offers on the sales of the fashion brands. The next is the research methodology for analysing the rationale of the methods used in the project while explaining the research and findings of the report. The later part will include the conclusion and the recommendation of the information gathered during the analysis that will help to accomplish the desired objectives mentioned in the topic. The research project is based on secondary data analysis while using the qualitative method for achieving the purpose of the report.
Literature Review
Fashion Brands
The impact of the covid-19 pandemic in the fashion industry is massive and Clark which is one of the best-selling brands in terms of fashion in the UK has suffered the loss of 8 % drop in sales in 2020 till May. The company has realised the drop in sales due to social distancing and in November 2020 it has decided to integrate with LionRock Capital investing Euro 100 million for transforming the retail sector into a digital platform (Yeo, 2021). The Clark family will withstand the position of being key stakeholders but the partnership will increase the capital to transform as per the customer’s demand. The company has also adopted the strategy of CVA proposal in the UK reducing to pay off rent to the shops in the UK which turnover has not been achieved. The brand has shifted the integration to turnover-based facilities for not paying off the rent of shops in the UK. However, the brand has increased the underlying profit up to 1.92% at the end of 2020 after the pandemic with various strategies.
Another brand of fashion is the Mark and Spencer clothing which suffered the loss for the first time in 94 years declining to a 34% crash in the first wave of the covid-19. The company has revamped the decision to add third-party brands for enhancing the clothing street fashion style in online websites to overcome the pandemic first wave crisis (Charles and Marciniak, 2021). The brand almost added Sosandar and Triumph, Jack and Jones, also attract new start-ups and renowned shoppers for variety. The integration method after the pandemic at the end of 2020 has been implemented but the revenue is still 31.2% down the line as compared to the pre-pandemic financial reports.
A fashion brand like Burberry has also sustained a loss of 3% in the UK during the first wave and they continued to face losses because of the confidence in not changing the strategy and the cost due to its brand name. The company has transformed to digitalisation and has integrated with African cycling companies for representing the brand in new jersey t-shirt which will be worn by athletes for increasing the demand (Colm and Prestini, 2021). The brand has suffered the loss in the first wave but the three months results after the cost cut in job retrenchment, digital selling, integration with other partners have increased the revenue in 2021. The brands like Next plc have however managed to maintain and increase their sales in 2020 due to online selling and discount offers while seeking the attention of the customers.
The fashion sector integration in the UK has been fluctuating and struggling to recover from the massive loss suffered during the pandemic and the recent integration can increase only 1 to 2% revenue even after the pandemic. The above companies have decided to integrate and open online websites for increasing delivery convenience but the loss of jobs and economic crisis has left the popular sector high and dry. However, the company like Burberry and Next Plc has maintained to recover the loss with strategic integration in 2021.
John Lewis
John Lewis fashion sector has almost collaborated with 50 new fashion brands for satisfying the demands of the customers with the shift in the lifestyle on post-pandemic. The athletes, loungewear, free-size cloths were added due to lockdown and home wear is preferred by the company over formals (Rashid and Barnes, 2021). The company has included brands like Mango, Girlfriend collection, Thought, Albaray, Dickies, Banana Republic, Community clothing, for expanding the online varieties in the company’s clothing store websites. But the revenue is Euro 3727.9 million which is less than the previous year in 2020. The company has exceeded operating expenses during the partnership of the luxury brands, operating online and supporting the government to overcome the crisis of the pandemic. But the future growth is expected to increase with the added number of renowned brands alongside the online availability of the products.
The John Lewis fashion brand has also been found offering 70% off on the menswear and womenswear at the end of 2020 winter season sale for recovering the loss. But in July 2021 the sales of the summer new season offer, 50% for fashion clothing in the women sector alongside sports clothing off for 30%. The men section and baby section are also been provided the offer for 50% off in buying the summer season cloths which has risen the revenue to 4% after the unpredictable downfall in the previous year. The integration of the brands to sell online has increased the sales growth to 9% in the mid of June through a digital transformation strategy in 2021 (Ritch and McColl, 2021). The Christmas offer in 2020 with the advertisement to stay united and fight the pandemic through kindness was very unique and the discounts to offer kindness to the poor have risen a small profit that month. The offer of free delivery on buying items over Euro 50 was another strategy of discounts to seek customer’s attention.
Another strategy of the company is to make available the Waitrose products on John Lewis and John Lewis products on Waitrose for one shop station availability. The pandemic has let the customers sneak out of their homes for necessity and they require products available at one place. Therefore, the fashion items will be available in both the partner’s stores for instant shopping; hassle-free at heavy discounts. The concept started after the pandemic and by autumn 2021 the stores will be operating including various fashion John Lewis items in Waitrose predicting to increase sales by 10%. The stores online have a 60% growth in sales rather than offline considering the online websites to offer the fashionable brands at low prices with attractive discounts due to low maintenance (Aliekperov, 2021). The revenue of mid-June 2021 has increased due to 60% demands from the online website and the heavy discounts in Summer, Christmas offers, and Winter sales. The company has closed almost 8 stores in the UK and planning to shut down 16 more due to the increase in demand for e-commerce online shopping rather than offline. The strategy of offers and integration of various brands to offer online than selling offline has increased the revenue in mid-June which was consistently found below the profit line due to operating overhead expenses in 2020 after the drastic transformation of customers opting for fashion accessories online.
The John Lewis fashion sector has formulated the strategy of providing offers from season to season during the economic crisis and the discount offers have attracted the customers to buy items online mostly. The company has also cut down the expenses of offering stores at various unwanted places by investing more online where the demands for the items have risen to 60% after the first wave. The integration strategy however does not seem delightful at the beginning of 2021 but till mid due to offers and the brand’s availability through online websites has increased the sales up to 4%. Henceforth, the above literature review of John Lewis showed positive growth with discounts and integration strategy.
Research Methodology
Research methodology is the process of deep analysis of research methods utilised for completing the research and concluding the results. It also helps in resolving the issues and challenges that arise in the entire research (Snyder, 2019). Research methodology enables great understanding to users about the way of collecting data, summarising information, and using the data that fives clear and concise understanding of the topic to end-readers. The present study highlights the impact of Covid-19 on fashion industry’s prominent contributor company John Lewis. The researcher uses effective methodology to highlight fashion industry and the company related issues faced due to the pandemic.
Research philosophy
Research philosophy is described as the belief or idea utilised by an investigator for performing the research on the given topic. Research philosophy is been segregated into four parts that include interpretivism, positivism, pragmatism and realism (Žukauskas et. al. 2018). It is mandatory to understand the four philosophies in brief as it gives an adequate sense to an investigator for choosing the appropriate philosophy. The researcher uses interpretivism philosophy as it based on data which collected from already published materials. The present study also depends on secondary data collection method. Moreover, this philosophy also provides relevant and accurate information that is necessary for such emerging issue in fashion company.
Research strategy
Research strategy aims at assigning the steps sequentially and designs the method efficiently for getting the positive responses and achieving the lined-up research aims and objectives. The researcher must use the best strategy out of different strategies so better results can be declared (Bobrovskij, 2018). Different types of strategies include empirical study, qualitative, quantitative, control-trial, meta-analysis, and many more. In order to analyse fashion industry issue and John Lewis current practice regarding to handle Covid-19 situation, the researcher use qualitative strategy and empirical study. These both strategies helpful to get reliable information and give insight about the company’s actual situation.
Research approach
The research approach helps the investigator in enumerating the collected information adequately. It has been divided into three parts that are inductive (bottom-to-top), deductive (top-to-bottom), and abduction approach (Tuffour, 2017). Inductive is used when the information is gathered from online sources that are not valid for current research. For the present study, the researcher uses deductive approach to examine the various integration method and the impact of strategies adopted post pandemic. Deductive approach helps to provide universal to particular information about the situation.
Research method/ Data collection
It is the most crucial part of the entire research as the process of gathering data is the essential part of the concluding result. The collection of data enhances the attractiveness and relevancy of the research along with providing enhanced understanding to readers. It has been divided into two major parts including primary and secondary methods (Newman and Gough, 2020). For the present study, secondary data collection method uses by the researcher. The information collected from different indirect sources for example, scholarly articles from fashion industry students, journals, online blogs related to John Lewis, newspaper articles related to the fashion industry and the company, and websites of fashion industry companies.
After gathering the information from different respondents, the investigator aims at interpreting the data by using appropriate analytical methods. For the current research, the investigator will use thematic analysis for interpreting the data. It helps in analysing the information by transforming the data into themes (Nowell et. al. 2017). Themes are described as the patterns that exist in different information collected from secondary sources. It involves six steps that include data familiarisation, searching similar patterns, initial code generations, review of themes, and naming themes.
Research ethics
The researcher will take care of ethics while collecting data and analysing them appropriately. In this context, the investigator collects all relevant articles and blogs while keeping in mind that the facts must be true. Other than that, participants are not forced to take part in the research and kept the private information safe and secure.
The major limitation of the research is time that limits to collect more information and it cannot be increased. On the other hand, the information was collected using online methods because of the pandemic and the investigator has to collect information using websites and online journals.
Key Findings
According to the articles of McKinsey & Company (2020), Covid-19 pandemic bring both an unprecedented health crisis and recession in global economy. The fashion industry also suffered a lot as per the research of annually industry revenues will contract by 27% to 30% in 2020. However, most of the economist predict that the industry overcome by 2 to 4 per cent by the end of 2021. At the same time, D’Adamo and Lupi (2021) critics that some of the fashion companies reached at bankruptcy in the upcoming 12 to 18 months. Some of the companies struggling to save their position in the market. Additionally, profitability in the fashion industry has deteriorated over the past eight years and the pandemic situation make it worst. Only 44% of international fashion giants generated economic profit.
No one in the industry get untouched from the intensity of this crisis as some firms are look for better equipped than others due to their robust digital techniques. As per the survey of consumer sentiments that conducted in May, reported that 40 to 50 percent European customer purchasing power for fashion products is declined as per the article of Nadkar and Davey (2021). Thus, most of the companies shift their focus on online shopping. However, e-commerce is not offsetting the sales reducing in store before pandemic. But in the current situation it proved as a lifeline for fashion brands as many stores have been shuttered. In the UK, two months after reopen the fashion stores, the owners face declined revenue from 40% in fashion products while online business constantly grow. As per the opinion of Kendall, (2019) it shows that offline business could migrate to e-commerce. Some of the fashion companies named it the ‘next normal’. It increases the importance of digital and analytical techniques. At the same time, social distancing practices is continuing which makes the customer less likely to visit brick and mortar stores.
The affect of such trends is different form each organisation which depends on its digital strategy and its orientation. Brydges et. al. (2020) said that most of the fashion giants who has share 30 to 40 percent in online sales becomes the vital part of digital value chain. On the other hand, laggards’ company whose share is only 20% of total online sales adopt low digitalisation level among the value chain. Fashion companies who adopted digitalisation is not only for increasing sales channel but also, it helps them to adopt cost structure and make value chain faster, better, and cheaper. For instance, digitalisation provides new logistics and sales-fulfilment options like drive through or click and collect options. Moreover, fuel innovative ways to attract customers, and predict or arrange stocks to make more flexible supply chain. These trends are completely depending on digital divide even before the pandemic.
The graph shows the difference between leaders and laggards about their online market share before pandemic situation. Davies (2021) argues that it changes after 2020 pandemic crisis. Now laggards’ companies also try to increase their online share. Thus, top to bottom fashion companies starts to reopen their networks with appropriate health and safety measure to reimagining of operations. However, the situation is uncertain and it evolving daily and digitalisation techniques should implement by fashion brands.
John Lewis, a fashion giant also shifts its focus on digitalisation in order to increase their sales and profit which get affected due to Covid-19. McMaster et. al. (2020) reported that the company also handle lot of other things also. For instance, the company announced hundreds of jobs are at risk as many brands may permanent close more in department stores following the Covid-19 pandemic. Moreover, the company already announce no bonus for their staff on 2020. At the same time, the chairwoman of the company, Dame Sharon White, reported that John Lewis witnessed ‘a decade-load of change concertinaed into 2020’ and also try to cope-up with customer changing purchase habits. The value of the company stores has been declined in 59% and online sales grow by 73%.
The Brand Index data shows that customer present scores indicate steadily decline of purchase goods from the retailers in the past three months from 17.1% in March 2020 to its low score of 9.9% in July due to the pandemic. Zhao and Kim (2021) argue that, the score also increases during Christmas which was 17.8% but decrease again due to January lockdowns.
The above data shows consideration scores where someone would consider to buy the company brand in future that is fluctuated throughout the past 12 months. As per the opinion of Shakespeare (2021), it may improve due to seasonal change and reaction to modify restrictions. They have remained in 38.5 and 43.2 which shows that customer desire to shop at John Lewis has not changed.
However, the company recently announced that they will going to introduce new pricing structure once stores reopen. Additionally, the value score of the company depends on the customer believe about the brand that represent good or poor value for money which increase by 1.3 points from 17.1 in the year before the pandemic start to 18.4 for the year after. According to the Liu et. al. (2021), there are no scope for the company to improvement if the score has increased. Moreover, the brand ranks eight behind high street fashion rivals like Marks & Spencer who rank fourth with score of 26. However, John Lewis consistently ranks high and has highest reputation score among giant fashion brands which is 45.8. It also scores 50 for highly impression and 58.9 for brand and quality.
Other than that, the John Lewis partnership warned more of its stores would be permanently shut after Covid-19 sent the UK’s highest employee-owned company to a 517 million pound (721 million USD) annual loss. Further, multiple lockdowns make the situation worst as physical stores already struggling with low margins and high competition form purely online players. The 156-year-old company reduced its department stores to 42, having shut eight last July which impacting 1300 jobs. As per the Shipper and Hoffman, (2020), the partnership firm of John Lewis bear huge loss for the year to January 2020 as compare to 2019 profit which was 146 million Pounds and its costs 648 million Pounds. Mainly the write down value of the company owning due to the shift to online along with restructuring and redundancy costs. John Lewis stores are now held on its performance sheet at half the value they were before write down the 2019-2020 year. However, the company plans to invest 800 million Pounds in 2021-2022 to support the turnaround and forecast financial performance that comprises debt ratio, liquidity, and profit before tax which was 131 million Pounds in 2020-2021. In the context of sales which is adversely affected due to pandemic and tough competition from giant online stores, the company face huge decline in sales in 2020-2021. According to the Jones et. al. (2020) before the Covid-19 the company calculated that 6 Euros of every 10 Euros in sales was connected to browsing in stores. But last autumn the company reported that Covid has cut the sales connection to stores to just 3 out of 10 Euros. As the result the group slashed the notion value of its shops by 470 million Euros which increase the half-year loss to 635 million Euros.
Other than that, John Lewis provides almost 50% discounts for all product categories and launch special promo codes for its clothing products in order to attract customers. The company wants to increase their sales and overcome from huge loss due to pandemic. For that purpose, the company offer huge discounts. Frei et.al. (2020) critics that, it increases loss and cost of the products but at initial level. Additionally, the company introduce attractive offer for online customers only in order to establish themselves as strong online player. At the same time, they loss their in-store customers. Thus, the company try to maintain the balance between online and offline customers by offering equal discount for their products.
Recommendation’s
The post-covid-19 first wave has impacted the fashion industry massively and the John Lewis fashion sector was one of the brands that were affected by the first wave declining the sales to 1.8% in 2020. The company also suffered loss till the beginning of 2021 due to the operational expenses and the additional strategies adopted because of the transformation in the lifestyle of the people of the UK. The recommendation after the analysis of the research project is given below:
- The first recommendation is to eliminate the cost of the retail stores which was found to be in demand after the first wave up to 40%. The other brands like Burberry, Next Plc., Marks and Spencer, are an example that online stores have been in demand in the market over offline. John Lewis has the biggest partnership chain providing various brands at one website which can be an advantage over others to operate smoothly therefore, it is suggestable to eliminate the retail stores for profit generation by 20% more.
- The next suggestion is to increase partnering with other brands apart from fashion for more exposure just like Burberry. The athlete sports companies will be a delightful integration for exploring the sports section effectively (Lewis et. al. 2021). The company can integrate with sports companies that are more involved in servicing the athletes for brand recognition. The pandemic has let the fashion industry suffer huge loss but companies like Burberry with the right partners have regained the sales demand instantly.
- The company can also use the robots for customer end delivery and the company already has integration for selling AI items in the store. The investment in Robot delivery will help to overcome the crisis of other waves which is affecting the people of the UK (Liu et. al. 2021). The huge rise in demand and scarcity of workforce can be resolved with the investment in robots for end delivery in a day. The offer of free delivery buying over Euro 50 must be eliminated with free delivery of the items without limit must be initiated. The specific amount and the strategy to deliver above that amount can impact the emotional mindset of the people negatively. Therefore, fast delivery and free delivery irrespective of the amount must be initiated to compete and increase the sales of the fashion sector of John Lewis.
- The last suggestion is the Offer for Christmas in 2021 must be changed into the concept of offering free clothes to the people buying above a certain amount and also following the previous concept of giving clothes to the poor. The old clothes exchange concept can be applied while returning the old clothes with an extra earning which can be deducted while buying the new fashion items from the store. This way the company can deliver the old clothes to the poor can recycle some of them for designing new items minimising the carbon footprint which will seek the attention of the crowd in the UK.
Conclusion
The present report discusses the effect of integration of more fashion brands and heavy discounts post first wave of Covid-19 on the sales of the UK based retail organisation John Lewis. The company considered as the prominent fashion company worldwide. The Covid-19 pandemic shake entire company’s sales and profit. Whole fashion industry suffers huge loss due to pandemic situation. Thus, most of the fashion companies focused on online retailing and purely shift their operations into online business and closed their physical stores permanently. John Lewis also focuses on digitalisation in order to overcome economic crisis and increase their sales and profit. On the other hand, John Lewis cut 1300 jobs and closed 8 physicals store. Moreover, the company face huge financial losses and constantly decline in sales. Therefore, the chairwoman of the company plan to invest in online business and partnership in order to sustain in the market. Further, the company also decides to reopen their stores and make continuity plan for their business. Other than that, the company offer attractive discount price for their products and especially for clothing products in order to attract their customers and overcome from financial losses. The report concluded by discussing its research methodology where data collected from secondary sources and thematic analysis used to evaluate the information. At last, key findings are discussed in the report in order to highlights the strategy of fashion industry to overcome from Covid-19 crisis and John Lewis current status and future strategies.
References
Books and Journals
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Online
Davies, R., (2021). John Lewis considering fresh store closures in response to Covid. [Online] [Available Through]: <https://www.theguardian.com/business/2021/feb/21/john-lewis-considering-fresh-store-closures-in-response-to-covid>
Kendall, S., (2019). Selling via e-commerce in the U.K. [Online] [Available Through]: <https://www.tradecommissioner.gc.ca/guides/uk_e-commerce-commerce_electronique_ru.aspx?lang=eng>
McKinsey & Company, (2020). Perspectives on retail and consumer goods. [Online] [Available Through]: <https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Perspectives%20on%20retail%20and%20consumer%20goods%20Number%208/Perspectives-on-Retail-and-Consumer-Goods_Issue-8.pdf>
Nadkar, T., and Davey, J., (2021). Britain’s John Lewis to axe more stores after COVID-19 ‘earthquake’. [Online] [Available Through]: <https://www.reuters.com/article/us-john-lewis-results-idUSKBN2B315G>
Shakespeare, S., (2021). John Lewis’ strong brand key to surviving impact of coronavirus. [Online] [Available Through]: <https://yougov.co.uk/topics/consumer/articles-reports/2021/03/17/john-lewis-strong-brand-key-surviving-impact-coron>
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