PROSPER MAGAZINE: DIGITAL EDITION
LESSONS THE HIGH STREET CAN LEARN FROM THE LAST RECESSION
In late September 2008, I sat in a London coffee shop, surrounded by the weekend’s papers. A week earlier, Lehman Brothers had collapsed. Recession loomed. As Managing Director of John Lewis, I read the headlines and thought: ‘so, what are we going to do?’
I was a relatively-newly installed MD at John Lewis, having taken over in February 2007, just as the economy began its long slide to recession. We needed a plan.
As shops reopen now, retailers are in a similar position, after the Office for National Statistics revealed that UK GDP had plunged by 20.4% in April.
As Mayor of the West Midlands, I know our region must plan its way out of a downturn that has been far more sudden than 2008. Back then, John Lewis decided to not only invest in the values that had always driven us to success but to reshape the business – to choose our own future. I believe the Black Country and West Midlands can do the same thing as we face recession again.
The cautious re-opening of shops after lockdown is a vital part of restarting the economy. Nearly two-thirds of the UK economy is made up of consumer spending - of which retail drives the biggest share. Retail directly employs nearly three million people. Napoleon famously described us as a ‘nation of shopkeepers.’ He was right - retailing is in our DNA.
It also plays an important social role in our communities. Seeing shoppers returning safely to our high streets will provide a tangible step on the road to recovery.
The economic road ahead will be tough. Any recession caused by coronavirus will be very different from 2008’s ‘credit crunch’. Then, we saw 18 months of worsening economic figures, culminating in the day Lehman’s went bust.
This crisis has unfolded in a shorter timeframe, brought on by the urgent need to shield people from the outbreak. However, there are parallels between these two recessions that can help us plot our way back to prosperity.
Looking back to that day in the coffee shop, I understand completely the tough decisions retailers now face. John Lewis’s profit was down 40% and people were losing their jobs.
The question was what to do. Should we simply dig in, and manage decline, or come up with a plan to drive the business forward and secure jobs into the future. We went for the latter.
We would continue to invest in our core business, but we decided to ‘place our chips on red’ and build a business model for the future – in our case online. We would build an online business linked to our shops, with the same brand values.
As a region, the West Midlands can take the same approach – by investing in the strengths that have always delivered growth here, while seizing new opportunities for the future.
We must invest in our core business – backing investment in the infrastructure of the region, like building HS2, expanding metro lines and opening new stations. We have to continue to support people’s basic need for housing by reclaiming derelict brownfield sites for development. We must continue to invest in digital infrastructures, such as the roll-out of 5G.
But then we must invest in the future, as John Lewis embraced online. For the West Midlands, that means developing new electric vehicles and the battery technology that is so critical to their success. John Lewis pioneered multichannel retail. The West Midlands can turn to electric Jaguars and a Gigafactory mass-producing the batteries to power the future.
The reopening of Britain’s shops is an important step towards recovery, and we need consumers to responsibly and carefully return to the high street.