Living With John Lewis

One of the most divisive unintended consequences of UK government policy protecting the country’s green and pleasant lands from development for the last 50 years is that there aren’t enough places being built for an increasing population to live in. For readers outside the UK sometimes confused as to why British property prices appear to have risen inexorably in the last few decades, the real reason is not the influence of international buyers or particularly well built homes. No, it’s simply been the effect of higher demand than available supply.

So who is John Lewis and what’s he got to do with all this?

John Lewis (JL) is a department store & through its subsidiary Waitrose, a food retailer to the British middle & monied classes and has been a venerable name throughout the country since 1864. Blessed with a trusted brand but beleaguered by the exodus to online and impacted by lockdowns like every other retailer, the JL mandarins sitting in HQ have come up with a simply superb idea to diversify. They’re moving into residential property. The initial plan is to build 10000 new homes for rental. If this sounds like a drop in the ocean in a country of nearly 70m people, actually it’s about 10% of the total new homes that were constructed in 2020. Therein lies the fundamental problem of course. The addition of housing stock is simply miles behind the pent up demand for a country of this size. Even if you recognise the rather dodgy official government measure of homes added to the housing stock (not just brand new) the total only reaches about 240,000 in 2020. By way of easy comparison, the US has a population about 4.5 times that of the UK and built 1.2m new homes in 2020, about 10 times that seen in the UK.

Many of you will have jumped ahead and started to imagine what happens to the supply and demand see-saw once the new stock rises. Well, yes, prices of existing stock will gradually become more affordable and price rises will slow and in some cases disappear completely. Whilst culturally, this will confound many who have tended to use their homes as an alternative to a pension in the last 25 years, it will enable a whole forgotten generation of those under 35 to be able to get on the ladder and rent or buy a home rather than living with parents or friends. Some old fashioned types might sniff at the idea of renting not buying. Well, the world has well and truly changed. Renting & leasing is the preferred method of access to cars, homes & many expensive goods and services for huge swathes of the under 35 age bracket. The concept of being laden down with a 25year mortgage in a fluid and flexible global world no longer works for many of us. And surely, at the end of the day a home is a place to live not an investment.

So back to our old friend John Lewis. Very soon Brits will be able to boast of living in a JL home with JL legendary customer service, furnished with JL furniture and JL accessories with a fridge stocked with JL fine groceries. That synergy will drive traffic back to the stores and online channels and create a cradle to grave relationship the like of which no retailer has managed since the twentieth century. Genius.


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