Varying exchange rates can also provide threats to John Lewis as prices for the goods imported can vary dramatically depending upon when they were bought. Obviously the in store price can’t vary at this rate however and as such profit margins may be larger at some times than others, in theory it could be possible that some products even end up being sold at a loss due to poor exchange rates. (A yearly average breakdown of the pound to euro exchange rate can be found in the appendix.)

4. Competitive Strategy

In the past, John Lewis had been said to be more Differentiation focused, by providing high quality goods based more to those people with a higher income, and as such creating more of a narrow market. The result of this though isn’t necessarily bigger profit margins as the products cost more to purchase in the first place. As a result of people generally becoming wealthier however, John Lewis prices have been deemed to be more acceptable and as such the market opens up creating a Differentiation strategy. This is where its high quality goods and services come into place to set the company apart from its competitors.

However by expanding into areas such as supermarkets through Waitrose and Ocardo, and the introduction of budget lines into the stores, John Lewis had started looking more at its cost focus, that being attempting to sell lower costing goods while still trying to retain some level of exclusivity. To some degree this has worked with the introduction of a lower cost range into the Waitrose stores. The Introduction of this new budgeted range goes against John Lewis’ past competitive strategy by focusing on the lower price aspect of marketing however John Lewis has realised that their past strategies no longer fit the shrinking market for high quality products “However, our research suggest many of our shoppers do not think they can do a full weekly shop at Waitrose on a tight budget. The essential range will help them do so, while watching their pennies.” (Richard Hodgson, Commercial Director).The release of the new budgeted line has been highly successful selling £100 million worth of products in just its first three months. This new competitive strategy may become an important point to the future success of John Lewis.