West Midlands Mayor: Using our strengths to find way back to growth
West Midlands Mayor Andy Street was in charge of John Lewis during the last economic crash. As the store reopens, he talks of parallels with today.
On Monday, September 22, 2008, I sat in a coffee shop in Victoria, surrounded by the weekend’s papers.
Barely a week before, Lehman Brothers had collapsed. Days later Halifax, the nation’s biggest mortgage lender, faced going bust. As managing director of John Lewis, I read the alarming headlines and thought: ‘so, what are we going to do?’.
John Lewis was one of the UK’s best-known retailers, and I was a relatively-newly installed MD, having taken over in February 2007, just as the economy started its long slide downwards to recession. We needed a new plan.
Now, as shops reopen this week, retailers find themselves in a similar position, after the Office for National Statistics revealed that UK GDP had plunged by 20.4 per cent in April.
As Mayor of the West Midlands I know that our region must plan its way out of an economic downturn that has been far more sudden than 2008. Back then, at John Lewis we chose to not only invest in the values that had always driven us to success, but to seize the opportunity to reshape the business – to choose our own future. I believe the West Midlands can do the same thing today.
Of course, leading one business, in one sector, through a downturn is vastly simpler than the task facing us now as a nation – but as we reopen our shops there are undoubtedly lessons to be drawn from the last time recession hit the high street.
This week’s careful reopening of more shops is an important step in returning our lives to some form of normality and a vital part in restarting an economy that has been put into hibernation throughout the pandemic. First and foremost, it is vital that we reopen our high streets safely, to give everyone the confidence to return.
Getting this right is crucial to the nation’s recovery post-Covid 19. Retail directly employs nearly three million people. Nearly two thirds of the UK economy is made up of consumer spending – of which retail drives the biggest share.
It also plays an important social role in our communities. For the British shopping has always been a social activity, from the village shops that act as local focal points to the high street stores that can seem more like family friends than corporate brands. Seeing shoppers returning safely to our high streets will provide a tangible step on the road to recovery.
After 30 years on the high street retailing is certainly in my bloodstream – and with John Lewis re-opening today I won’t be able to resist returning, as a shopper, to perhaps pick up a few items from the Solihull branch.
The economic road ahead will be tough. The recession that will no doubt come as a result of coronavirus is very different to the ‘credit crunch’ of 2008. Then, we suffered 18 months of economic figures which worsened almost daily, reaching its nadir with TV images of shellshocked Lehman’s staff leaving their New York HQ, their belongings clutched in boxes.
This crisis has unfolded in a much shorter timeframe, brought on by the necessity to protect people from Covid 19. However, there are parallels between these two downturns that can help us plot our way back to prosperity.
Looking back to that day in the coffee shop, and the weeks that followed, I understand completely the tough decisions retailers now face. It was a painful time. John Lewis’s profit was down 40 per cent and people were losing their jobs.
The question was what to do. Should we hunker down and manage decline or come out boldly with a plan to move the business forward and secure jobs into the future. I recall that decision came at a meeting at John Lewis in Reading. We went for the latter.
We would continue to invest in our core business – including opening new shops. But boldly, we decided to ‘place our chips on red’ and put our trust in technology, to build a business model for the future – in our case online. Our difference was 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. The Government has done a good job so far in protecting the economy – with the short-term furlough scheme, business rates holiday and other interventions. This gives us a start.
But we must continue to invest in our core business – that means backing investment in infrastructure of our country, like building HS2, expanding metro lines, opening new stations and providing new, greener transport options such as cycling infrastructure. We have to continue to support people’s basic need for housing by continuing to reclaim derelict brownfield eyesores for development. We must continue to invest in digital infrastructure, such as the roll-out of 5G.
But then we must invest in the future of business, as John Lewis embraced online trading. For the nation this means investing in the jobs and economy of the future. For the West Midlands, that means taking the lead in developing new electric vehicles and the battery technology that is so critical to their success. John Lewis boldly pioneered multichannel retail – a concept which is now commonplace. The West Midlands can turn to electric Jaguars and a Gigafactory mass-producing the batteries to power the future.
At John Lewis, our plan aimed not just to get us through the recession but to power us into a period of sustained growth. Crucially, this was embedded into the business by engaging our partners and colleagues in the new concept. Here in the West Midlands, on a much grander scale, our seven local authorities, businesses and communities are drawing together in the same way to develop our own Regional Economic Plan. Unity of purpose is vital.
There is no doubt that our economy is about to change again, and that change will be hard for many people, impacting on jobs and businesses. We must repeat what I sought to do in John Lewis from 2008 – by investing in the core business and the jobs that depend upon it, while identifying and seizing the new opportunities that are so critical to the future.
The reopening of Britain’s traders this week is an important step on the road to recovery and we need consumers to responsibly and carefully return to the high street.
Napoleon famously described us as a ‘nation of shopkeepers’. He was right – retailing is in our DNA. Now that those shopkeepers are once again putting out the ‘open’ sign, let’s all play our part and help reawaken our economy.