Should John Lewis prioritize expanding its premium home brand offerings to boost margins or focus on more affordable ranges to increase sales volume?

Introduction

The trade-off question at hand is whether John Lewis should prioritize expanding its premium home brand offerings to boost margins or focus on more affordable ranges to increase sales volume. This scenario involves balancing the potential for higher profit margins against the opportunity to capture a larger market share through more accessible products. My response will analyze this trade-off, considering various factors such as market positioning, customer segments, and overall business strategy.

Step 1

Clarifying Questions (3 minutes)

• Based on the current market conditions, I'm thinking there might be a shift in consumer spending habits. Could you provide insights into recent trends in customer purchasing behavior across different price points?

Why it matters: Helps understand if there's a natural market pull towards premium or affordable products. Expected answer: Slight shift towards more affordable options due to economic uncertainty. Impact on approach: Would lean towards expanding affordable ranges if confirmed.

• Considering our brand positioning, I'm curious about how our current product mix aligns with customer perceptions. What percentage of our revenue currently comes from premium vs. affordable home products?

Why it matters: Indicates where we have established strength and customer trust. Expected answer: 60% premium, 40% affordable. Impact on approach: If premium is dominant, might suggest cautious expansion of affordable lines.

• Looking at operational capabilities, I'm wondering about our supply chain flexibility. How easily can we adapt our production and sourcing to support either premium or affordable product expansions?

Why it matters: Assesses feasibility and potential time-to-market for new product lines. Expected answer: More flexibility in affordable range due to existing relationships with suppliers. Impact on approach: Could favor affordable expansion if significantly easier to implement.

• Considering our digital presence, I'm thinking about our e-commerce performance. How do conversion rates and average order values compare between premium and affordable home products on our website?

Why it matters: Indicates online consumer behavior and potential for growth in each category. Expected answer: Higher conversion for affordable, higher AOV for premium. Impact on approach: Might suggest a balanced approach, leveraging strengths in both categories.

• Given the competitive landscape, I'm curious about market saturation. How does our market share compare to competitors in both premium and affordable home product categories?

Why it matters: Identifies potential growth opportunities and threats. Expected answer: Strong in premium, room for growth in affordable. Impact on approach: Could support expansion into affordable range to capture market share.