John Lewis Partnership - History

History

John Lewis opened a drapery shop in 1864 at 132 Oxford Street, in London. He had been born in Shepton Mallet in Somerset in 1836, and been apprenticed at 14 to a linen draper in Wells. He came to London in 1856 and worked as a salesman for Peter Robinson, an Oxford Street draper, rising to be his silk buyer. In 1864 he turned down Robinson’s offer of a partnership and rented his own premises on the north side of Oxford Street, on part of the site now occupied by the department store which bears his name. There he sold silk and woollen cloth and haberdashery. His retailing philosophy was to buy good quality merchandise and sell it at a modest “mark up”. Although he carried a wide range of merchandise he didn’t bother much about displaying it and never advertised. His skill lay in sourcing the goods he sold, and most mornings he would go to the City, accompanied by a man with a hand barrow. Later he would make trips to Paris to buy silks.

Lewis spurned holidays and games and devoted himself entirely to the business, which was very successful. He invested the money he made from it in residential and small retail properties, many of which he never visited. He expanded the Oxford Street business by renting neighbouring properties on Oxford Street and then along Holles Street, and gradually moved into other classes of merchandise: first the new area of ready-made women’s apparel, and later children’s wear and furniture. He never held “sales”, saying that he was intent on building a sound, permanent business.

In 1884 and aged 48 Lewis married Eliza Baker, a schoolmistress with a university education, who was eighteen years his junior. They set up home in a mansion on the edge of Hampstead Heath, for which Lewis made up the name Spedan Tower. He must have liked the name because when Eliza bore a son in 1885 he was called John Spedan Lewis. A second son, Oswald Lewis, was born in 1887. After Westminster School, both sons joined Lewis in the business, and he gave each of them a quarter share of it on their twenty-first birthdays.

There was constant quarrelling between Lewis and his sons. By 1909 Oswald wanted out and Lewis senior reluctantly agreed to buy back Oswald’s quarter share of the business for £50,000 (equivalent to about £4.5 million in 2010). Oswald went to read Law at Oxford, qualified as a barrister, and became a cavalry officer in 1914, but was injured and discharged in 1916, whereupon he accepted an invitation from his father to rejoin the business.

Lewis had several run-ins with Lord Howard de Walden, his Oxford Street landlord, and in 1903 he spent three weeks in Brixton Prison for defying a court order obtained by de Walden. In 1911 de Walden sued him for libel; Lewis was found guilty, but the jury awarded damages of just a farthing.

In 1906, Lewis bought a controlling interest in the Sloane-Square-based business Peter Jones Limited, the eponymous founder of which had died the previous year. Lewis walked from Oxford Street with the £20,000 purchase price in bank notes.

In the next thirteen years the Peter Jones business was not profitable – no dividends were paid to Lewis and the external shareholders – and in desperation in 1914 Lewis appointed Spedan as chairman of Peter Jones. This gave Spedan Lewis complete control and he decided that the underlying problem was that the staff had no incentive to do a good day’s work because their own interests were not in line with those of the business. He shortened their working day and instituted a system of commission for each department, paying selling staff amounts based on turnover. He held regular meetings at which staff could air any grievances directly with him. In 1916, after a disagreement with his father, Spedan Lewis exchanged his 25 per cent interest in the Oxford Street business for Lewis’s shares in Peter Jones Limited. He made improvements in staff conditions, including granting a third week’s paid holiday each year. He had hot and cold running water installed in the staff bedrooms over the shop. In 1918 he started publishing a fortnightly newspaper telling staff how the business was faring. In 1919 he instituted a staff council, the first decision of which was that staff should be paid weekly instead of four-weekly. Business prospered: there was a profit of £20,000 in 1920.

Spedan Lewis’s radical idea was that the profits generated by business should not be paid solely to shareholders as a reward for their capital. Shareholders should receive a reasonable but limited return, and labour should be the recipient of the excess. His concept of “fairer shares” involved sharing gain, knowledge and power. In 1920 Spedan started distributing Peter Jones preference shares to staff, who were now called “partners”.

In contrast, John Lewis made no improvements to the conditions of his staff, and grievances built up to such an extent that in 1920 there was a five-week strike at Oxford Street. Despite support for the strikers from – amongst others – Queen Mary, Lewis sacked them and engaged new staff. The early 1920s were not successful for Peter Jones. Dividends on preference shares, many of which were held by partners, were not paid. In 1924 there was a reconciliation between John Lewis and Spedan Lewis. Trade at Oxford Street had fared better, and a John Lewis made cash injection into the Sloane Square business.

In 1925 Spedan Lewis devised the slogan “never knowingly undersold” at Peter Jones. Intended mainly as a control on sourcing merchandise, it also meant that customers could shop knowing that they were not paying more at Peter Jones than they could buy identical goods for at other stores. Trade improved and profit sharing was resumed.

By 1926 Lewis senior was 90, Spedan was impatient to gain control of John Lewis, Oxford Street, so that he could implement his radical ideas there, and Oswald again wanted out. Without telling their father, Spedan took out a bank loan and bought out Oswald’s inheritance. After going round the world, Oswald embarked on a political career, becoming Conservative MP for Colchester in 1929, and holding the seat until 1945. John Lewis died aged 92 in 1928, and Spedan Lewis became sole owner of the Oxford Street business, in addition to Peter Jones. That same year, he bought the premises of T J Harries on the eastern side of Holles Street in Oxford Street, into which he exapanded John Lewis.

In 1929 Spedan Lewis signed a deed of settlement which transferred shares in John Lewis Limited and Peter Jones Limited to trustees (himself, his wife and his brother-in-law). The profits of the combined business would be distributed to its employees, either as cash or as fixed-interest stock in the new company: the John Lewis Partnership Limited. In return, Spedan Lewis took £1 million of non-interest-paying loan stock, which would be repaid to him over thirty years. He would retain a controlling share in the business, but would not receive any interest, fees or salary, living on the repayment of the loan stock. These annual capital repayments were initially equivalent to about £1.5 million in 2010 money, but inflation reduced their value by the 1950s to the equivalent of about £0.5 million in 2010 money.

In 1933 the John Lewis Partnership started acquiring other retail businesses, buying Jessops of Nottingham, and Lance and Lance of Weston-super-Mare. In 1934 it acquired Knight and Lee in Southsea, and Tyrell and Green in Southampton. It also started a rebuilding programme of Peter Jones to a modern design. In 1937 it bought Waitrose Limited, which operated ten counter-service grocery stores in West London.

The biggest acquisition came in 1940, when the John Lewis Partnership paid £30,000 for Selfridge Provincial Stores Limited, which owned 15 shops: Blinkhorns in Gloucester, Buckleys in Harrogate, A H Bull in Reading, Bon Marché in Brixton, Caleys in Windsor, Cole Brothers in Sheffield, George Henry Lee in Liverpool, Holdrons in Peckham, John Barnes in Hampstead, Jones Brothers in Holloway, Pratts in Streatham, Quin & Axton in Brixton, Robert Sayle in Cambridge, Thomsons in Peterborough, and Trewins in Watford. The business now comprised 21 department stores and ten grocery shops.

The War took its toll, and several stores were damaged by bombing, notably the “west house” of John Lewis, Oxford Street, which was lost completely in September 1940. Some small businesses were acquired, including a leather good shop, and three silk shops. In 1948 three drapery stores were created in South Africa, but were closed in 1954.

In 1950 Spedan Lewis executed a second deed of settlement, which passed ownership of the John Lewis Partnership to trustees to hold for the benefit of those who worked in the business. He also announced that he would retire as chairman on his 70th birthday in 1955. He had originally intended that Michael Watkins, his right-hand man for many years, would succeed him as chairman, but Watkins died in 1950. Spedan asked his son, Edward Lewis, if he would fill the role but he declined. Spedan appointed a loyal, long-serving lieutenant, Bernard Miller, but expressed the hope that in due course Edward would succeed Miller as chairman. In the event, Miller was succeeded by Peter Lewis, the son of Oswald Lewis.

In 1953 the John Lewis Partnership sold several small stores but acquired two large ones: Heelas in Reading and Bainbridge in Newcastle.

The principle and slogan never knowingly undersold adopted in 1925 is still honoured and has been widely copied. The principle has been more refined, most notably to exclude retailers who only trade through online shopping. The pledge has recently been revised to include extended insurance and delivery charges when comparing undersale values. However, they were the only large retailer that would match the price with any UK shop, not restricting it to a local area, until DSG International plc adopted the same policy in July 2007. John Lewis monitors local competitors and reduces the shelf edge price if it is being "undersold".

The rebuilt store on Oxford Street was reopened in 1960, and the sculpture Winged Figure by Barbara Hepworth was added in 1962.

To accommodate national advertising, in 2002 the company began the process of renaming stores not branded as John Lewis (Tyrrell & Green, Heelas, etc.) with the nationally recognisable name. Peter Jones in London will remain the only exception to this policy when the premises of Knight & Lee are replaced by a new department store in Portsmouth.