Changing Business Models Luke Kingsnorth John Lewis 13 th May 2008

2 Where did it all start?  £6.8bn sales (6.3% up YOY)  £411m profit (15.7% up YOY)

3 The birth of Johnlewis.com…  1999 – Launch of Johnlewisnow.com (limited selection, 20 orders per day)  launch of johnlewis.com, purchase of Buy.com for £2.8m  Promise of £30m investment with a view to 5,000 products online in 5 years  First Christmas 1,000 orders on busiest day, 800,000 page impressions

4 Johnlewis.com growing up…  Sales of £268million, an increase of 44.6% on the previous year  24,000 orders on busiest day & 3,000,000 unique visitors in peak week 2007  Growth in online sales represented 56% of John Lewis’ growth  Full line department store assortment – 35,000 SKUs and growing  Complete in-house operation – 180 Partners plus outsourced contact centre and fulfilment operations

5 Drivers for change  Changing customer behaviour & expectations. The role the internet plays in purchase in store and vice-versa  The site allows a national footprint that is beyond what we could offer through stores.  24/7 shopping mentality  Multi-channel customers spend more

6 How is John Lewis changing?  Johnlewis.com was kept as a separate SBU to allow for rapid change, now it’s time for it to be more integrated (service, operations, stock & marketing)  Very real awareness of the need to be ‘multi-channel’ and not just ‘multi- distribution’  The need for one view of customer and as consistent service as possible regardless of channel. Bringing the Partner difference to Johnlewis.com  Real desire to embrace the idea and implications of integrated marketing plans

7 What does integrated marketing look like at JL? Start with consistent objectives Set clear, reportable KPIs Pick the right media Execute with consistency Review as one LEARN

8 Search by numbers  Search marketing accounts for 50% of all traffic to Johnlewis.com  Paid vs Natural search is 50/50  PPC spend has grown by 300% from 06 to 08 and is 50% up from 07 to 08  It’s a key area of marketing media with TV, Catalogues, Press and online  Spend will continue to increase in line with online growth and because of inflationary pressures  Managed by account team at Steak Media & John Lewis PPC Manager.  Board level interest in the plans for search and potential future impacts.

9 Search integration  Brand bidding requires a focus on cost control and messaging  Full product listing allows us to tackle the ‘long-tail’ of search. This requires a lot of work due to size and churn of product offering  Linking with ABTL advertising is key for consistency and brand building. Vital to have close links between media buying & search agency  Links with seasonal events through PPC allow us to target ‘inspiration’ searches Brand Product Advertising Inspiration

10 Any questions?