John Lewis Partnership has expanded its long-standing relationship with Google with a £100 million deal as part of a wider digital transformation overhaul.
Google and the employee-owned partnership, which runs John Lewis department stores and the Waitrose supermarket chain, have worked together since 2012. This latest expansion will see the struggling UK retailer migrate its tech stack over to Google Cloud and, significantly, tap into the tech firm’s Artificial Intelligence (AI) and Machine Learning (ML) capabilities to help improve the customer experience by enabling the workforce to be more efficient and make better use of data to curate products and services.
Nish Kankiwala, Chief Executive at the John Lewis Partnership, said the Google Cloud move was designed to build out the firm’s technology infrastructure for the long term:
Investing in cutting edge technology is not just a choice, it’s a necessity for a modern retailer like us.
The formal announcement states:
The company’s strategy of creating brilliant in-store and online experiences has already been successful in attracting more customers this year. This partnership with Google Cloud will take its retail experience to the next level – both in-store, and via its digital platforms, including JohnLewis.com, Waitrose.com, and its owned mobile apps. Moreover, the agreement will support the John Lewis Partnership’s ambition to get closer to its customers by creating a pan-Partnership loyalty programme in 2024.
On that last aspect, the retailer earlier this year announced five year deals with dunnhumby and marketing tech firm Eagle Eye Solutions Group to help build on the 2022 launches of My Waitrose and My John Lewis loyalty schemes. As of April this year, both programs were boasting success:
More than 9 million customers are members of My Waitrose which in the past year has rewarded customers with £100m in personalised money-off rewards. My John Lewis has grown to five million members who shop more frequently at a rate of 2.5 times more than non-members.
The next step, following the appointment of Emily Wells as the firm’s first pan-Partnership Head of Loyalty, is to bring a cross portfolio loyalty program across the firm.
AI
As to the specifics of what John Lewis envisages AI bringing to the mix, Zak Mian, Head of Transformation and Technology at the Partnership, painted a use case exemplar:
Imagine a world where a customer can use an image scanning feature in their John Lewis App to show our Home Design Stylists a room they’re looking to furnish, which tells us all we need to know about the intricacies of the space, layout and measurements. Not only does it save customers a lot of time and hassle, but even before the appointment we can take inspiration from their unique preferences and give tailored recommendations that can even complement products they already have.
According to media reports, an AI customer service bot will be the first manifestation of the new tech in action.
The investment comes at a time when John Lewis Partnership is halfway through a five year turnaround plan. It reported a £234 million loss for its 2022-2023 fiscal year. In its latest analyst briefing last month, the Partnership cited making “achievable efficiencies” a priority, including:
Savings through simplifying structures in shop leadership and our offices, more data-led buying, property and procurement savings, and general productivity improvements.
My take
According to Google Cloud CEO Thomas Kurian:
As an innovative British retailer with a strong commitment to customer service, the John Lewis Partnership is always looking for new ways to reinvent how it does business. By turning to Google Cloud’s leading AI and ML tools, John Lewis will help transform the partner experience, which in turn will deliver a better and more seamless experience for its customers.
I’m not going to argue about the commitment to customer service, but the always looking for new ways to re-invent the business angle has been highly questionable of late. That said, the Partnership has always been a big investor in tech to good effect – as the number of use case stories on diginomica alone over the years indicates – so this latest expansion with Google is hardly without precedent. Nor is the type of use case cited by Mian above. French retail icon Galeries Lafayette’s Augmented Reality strategy has had similar ambitions since 2020.
What will ring alarm bells in some quarters is the focus on AI in the announcement. Will this lead to job losses? Will the pursuit of increased automated personalization in fact lead to a reduction in the ‘never knowingly undersold’ personal touch that John Lewis has been so famous for?
In reality, the kind of AI-enabled future envisioned has been coming down the tracks a lot faster since the COVID crisis. Back in 2021, diginomica quoted Andrew Murphy, then Group Operations Director at John Lewis Partnership, as stating:
Every business case for any form of automation or digitization that existed before February last year has just got significantly stronger. I’ve seen probably a third of the business cases that were on my desk in the pending file have moved into viability simply as a result of what’s happened in the last 12 months.
Interestingly, Sharon White, Chairman of the John Lewis Partnership, recently wrote a thought piece for the Mail on Sunday newspaper on the subject of the “dark side” of AI, in which she talked up the need for regulatory protections, but not at the cost of stifling innovation. She argued that the Partnership has a lot of experience around AI, with the retailer having opened its first automated warehouse as far back as 2009.
But she added a significant – and important – caveat:
For our business AI will never replace the uniqueness of human connection and senses. Robots will never trump the creativity of our chefs conjuring up new food combinations where taste, smell and touch are so critical to experiencing our food or the creativity of our John Lewis designers. The John Lewis Partnership is a business founded on human relationships and emotional connections. The serendipitous moments we get when meeting people – the personal touch in the way we serve our customers.
She went on:
Of course, new technologies must be embraced for businesses to modernise and meet customers’ needs. The John Lewis Partnership has a history of taking bets on innovation – we got into online retail before many. AI will help ensure our stock flows round the business in the most efficient way. It will also help to make our customers’ lives easier by providing recommendations about what products they may like based on their preferences.
But we will always choose the power of human connections, creativity and senses. For a people-centric business like ours, the robots won’t be taking over, so don’t write off the humans just yet.
In other words, AI is going to be used by John Lewis Partnership for the pursuit of fresh efficiencies, but it’s not going to be replacing the staff on the fish counter in Waitrose. That’s an appropriate attempt at expectations management at a time when the AI hype cycle is out of control.
