Shopaholics will be delighted – contractors, too: John Lewis Partnership plans to double its floor space within 10 years and is looking for new firms to work with. Roxane McMeeken met Tony Jacob, aka the man with the cheque book
A village of immaculate white buildings nestling on grassy hillocks is the sight that greets you as you approach the headquarters of Waitrose. Every building looks bright and fresh, with a pale green trim. There’s no sign saying Welcome to Waitrose Town, but it feels as if there should be.
As I rush into reception, the man I’m supposed to meet is already there, smiling, calm and collected. “Welcome to Waitrose”, says Tony Jacob, head of construction management for Waitrose’s parent, John Lewis Partnership (JLP).
Like Waitrose Town itself, Jacob appears well groomed and friendly. He explains JLP’s eye-poppingly ambitious construction programme with the air of cool efficiency you’d expect from a former QS. The aim is to double the amount of shop floor space for John Lewis and Waitrose in 10 years. It will be done through a mixture of new builds and acquisitions. He’ll be spending up to £300m a year over the decade on construction. And the good news is that he’s looking for new contractors to spend it with. But if you want to work with JLP, you’ll need to be as smooth and efficient as the firm itself. Working with JLP is “fast, furious and high risk” says Jacob. “It’s all about delivering on time.”
If you’re still not convinced that this is an exciting client, consider that John Lewis has become the store of choice for high-profile town centre developments. A John Lewis is the jewel in the crown in Hammerson’s £350m Highcross scheme in Leicester, which is opening in September. And the building is no workaday shopping mall. Instead, it has been designed by Foreign Office Architects and mixes imposing scale with a delicately patterned facade (pictured).
As Building went to press, another impressive 22,304m2 John Lewis shop was due to open this week (29 May), forming one of the highlights of the Paradise Project in Liverpool’s town centre.
Meanwhile, developer Minerva is desperately trying get John Lewis to become the centrepiece of its plans to redevelop Croydon. Although the retailer takes space within shopping centres being built by developers, unlike most of its rival, it develops its own projects inside the wider scheme, appointing its own consultants and contractors. The same goes for the Waitrose side of the business; in the past four years JLP has bought about 60 shops from companies such as Morrisons and Somerfield.
But could the current financial turmoil blow John Lewis off course? Jacob seems pretty unruffled by this possibility. “We’re not changing our plans in light of the credit crunch. It does put more pressure on us to be even more efficient with how we spend money, but we’re already addressing this.”
He adds that although the impact of the economic conditions have yet to be felt fully in construction, he is finding that the developers he works with are “looking for more cost certainty at every stage”. This means more are using design-and-build contracts.
JLP itself uses design and build for Waitrose supermarkets, but sticks to the JCT management form of contract for John Lewis stores. David Underwood is co-head of the main project manager that JLP uses, Underwood Carpenter. He says: “They are pragmatists and each project they do has different needs, so risk will be spread differently. The department stores are more complex, so they tend to use JCT on those, otherwise you’re handing over too much design responsibility to the main contractor.”
Jacob admits he is also worried about how the credit crunch will affect the cost of materials. “One of the biggest challenges coming will be the rising prices and falling availability of materials. So we are trying to buy things such as glass as far in advance as possible.”
Building sustainably will also be challenging in the current climate, he says. But he claims JLP won’t be blown off its course here, either. The company’s sustainability strategy, launched two years ago, aims to make JLP’s stores eco-friendly from inception to maintenance.
So what’s it like to work for JLP? Just as the firm looks after those who work behind the checkout – they are “partners”, not staff (see box) – it also claims to treat its construction supply chain fairly. “We don’t hold retentions. We have a 28-day payment policy and we insist this is written into contracts so it goes throughout the supply chain.” But how does he ensure that the main contractors he uses treat the specialists they employ in the way he wants? “We encourage specialists to tell us if they’re having problems.”
David at Underwood says: “JLP’s projects are happening too fast to go out to tender. Instead, the supply chain is on board from day one; it’s totally integrated and everyone is open about how much money they are making from the project.”
If you want to work for JLP, you will certainly have to work fast. “We are working hard on speeding up the building process,” says Jacob. One way of doing this on refurbishment projects is to work on the shell of the building at the same time as fitting out the interior. This cut the time taken for a recent John Lewis job in Cambridge from what would have been 60 weeks to 40 weeks. Supermarket conversions are even quicker, with some taking a mere 14 days, the supply chain working through the night.
It is the quickening pace of the building programme that is forcing Jacob to find extra contractors. “Last year was pretty challenging,” says Jacob, particularly the £65m redevelopment of our Oxford Street John Lewis store and major work on two key London Waitrose stores – Marylebone and John Barnes [Finchley Road]. “We felt we were not operating as quickly and as efficiently as possible.” So, in July 2007, he hired consultant EC Harris to come up with a plan to improve the construction programme. “We looked at our structure again and we have a new focus.” This includes making sure our supply chain understands what they are doing. “We now hold briefings with our main contractors and the key trades.”
Broadening the supply chain is another key point of the EC Harris plan. “We are happy with the firms we use, but we don’t want to overstretch them,” says Jacob. He has drawn up a list of contractors he plans to speak to, but he’s also happy for firms to approach him.
Following EC Harris’ advice, JLP has also added an extra two bosses to lead its 100-strong in-house construction team of designers, cost consultants and engineers in order to spread the growing workload. The team is managed by Nigel King, director of construction, a QS who has been with JLP for 10 years. Since Jacob joined JLP four years ago, he has worked alongside Steve Isaia, who heads architecture and maintenance. In April, the team was beefed up when Mark Ryce was promoted to the new role of head of supply chain and Sarah Hallette to head of engineering, energy and environment.
So what are they looking for in contractors? “We want people with major project experience, a very strong fit-out background, but also an understanding of construction,” says Jacob.
A John Lewis project, he says, is among the most complex retail jobs in the business. A typical store has 1,600ft2 of selling space, plus several cafes, bathrooms and an average of around 1,000ft2 of behind-the-scenes facilities. The range of items needing to be displayed is wider than your average department store, he claims, including high-definition TVs, garden furniture and an extensive range of kitchen equipment.
If you can get your head around all this, Jacob says he also wants you to be “open and clear with us – be commercial not contractual. People who are obsessed with contracts tend to cost us a loss of time and strain the relationship.”
Next on his wish list is “absolute commitment to delivering on time, which means overcoming hurdles at any cost”. It may sound tough, but it seems this is what it takes if you want to be part of the well-oiled world of JLP.
Contractors and consultants used by JLP
Styles & Wood
Bamber & Reddan Architects
Alan Park Associates
Ridge & Partners
Robinson Low Francis
What he likes to see in contractors and consultants
“I like people who are great communicators, who are great in a team. People who will strive for integration, honesty and trust.”
What turns him off
“People who have not thought about things from a retail perspective – we only want to work with people who understand shops.”
Who JLP works with
Underwood & Carpenter and Ridge to project manage the construction management work stream, with a 65/35% in Underwood & Carpenter’s favour.
April’s Competition Commission recommendations on supermarkets include measures to prevent them “land banking” (buying up land to stop rivals getting it). “It’s happening 10 years too late. If this had happened a decade ago, the food retail situation would be very different now. We would benefit if those holding land banks were forced to give them up, but I don’t think it will happen.”
Life at JLP
John Lewis Partnership has 26 department stores and 187 Waitrose supermarkets and plans to double this in 10 years.
JLP is the UK’s largest employee co-operative. This means that while some of its profits go to shareholders and investing in the business, the remainder is split between its employees, or partners, in the form of an annual bonus. This year all partners got a 20% bonus.
The firm’s operating profit (including property profits) for the year to April 2008 was up 25% on the previous year, at £220.7m.
Capital spending in 2007/08 was £363m. The money was spent largely on refurbishing JLP’s Oxford Circus department store, including putting a Waitrose in the basement, and relocating stores in Cambridge and Liverpool, plus building a new store in Leicester.
In 2006/07, the firm spent £393.4m on ventures including buying 11 stores from Morrisons and Somerfield and converting them into Waitrose supermarkets.
Original print headline: "Double helpings"