John Lewis is to launch a new store format, focusing on homewares including electricals and home technology. The new format will be a third of the size of a typical John Lewis department store and will sell the retailer’s electrical and home technology ranges along with additional features including an espresso bar, customer collection and a gift list service.

John Lewis will roll out the first of the new stores this autumn at Land Securities’ Poole Commerce Centre, an edge of town retail park situated on the A35 between Poole and Bournemouth, Dorset. It will trade from 45,000 sq ft and the retailer believes there could be 30 locations across the UK which would support such a store.

To condense a large part of its range into a much smaller format John Lewis will have to transform its back-of-store operations: the selling support area and stock holding areas within the new format will be much smaller, relying instead on an efficient supply chain from distribution centre to the shop floor.

John Lewis managing director Andy Street, said: “This is a significant departure for our business. Poole will be our first new format shop for 20 years. Like our full line department stores the new format John Lewis will bring our differentiated service, inspiring products and great value to a new market.”

Retail director Gareth Thomas added: “The new format has been based on a enormous amount of research which showed us that there are areas of the country where consumers wanted to be able to shop at a John Lewis branch within a 40 minute journey of their home.

“We know our competitors have a much higher level of coverage in the UK than we do and our research has shown that there are growth opportunities for our business in smaller format shops, giving our customers more convenient access to John Lewis products.”

Although Street made it clear the move did not signal a retreat from the traditional department store format, it does allow the retailer to continue expanding at a time when large-scale shopping centre projects, upon which JLP depends for the delivery of sites, have all but ground to a halt.

Speaking at a BCSC breakfast, Street said that in the past year JLP has opened department stores in Cambridge, Leicester and Liverpool. He is particularly pleased by the latter. “The success of Liverpool has taken everyone by surprise,” he said. And the Cardiff store, anchoring the St David’s 2 project, is on schedule to open in September 2009.

However the picture is much less clear going forward. Westfield’s Stratford City on the Olympic site in East London is already under construction and will open in 2011. And the Dublin site, where John Lewis will take its format outside the UK for the first time to anchor Chartered Land’s Dublin Central project, is still alive. “We’re aiming at 2013 and I think we’re on target,” said Street.

But he added: “All our other projects are now uncertain.” That means schemes in Portsmouth, Crawley, Croydon, Oxford, Sheffield, Leeds, Preston and Lisburn have all been put back and JLP’s ambition to open at least one new store a year for the foreseeable future is not now achievable.

However Street asserted: “We’re still looking for another ten more locations for full-line department stores on top of the existing pipeline.”

Despite this setback, Street insisted that the overall business is resilient, with like-for-like sales figures down a relatively benign 3.4 per cent. He ascribed this to the unique product mix offering one third fashion, one third homewares and one third technology.

In fact, fashion is the only growth area: homewares are down 12 per cent year-on-year and technology 7 per cent although Street noted that both are outperforming the BRC benchmark.

Street promised that the retailer would not be blown off course by the recession. “We can let the profit take the strain and continue to do the right thing for our customers,” he said. “That’s the big benefit of the John Lewis Partnership ownership model.”

Street has identified a number of key challenges for the retail business. First is online. He notes that UK online sales are set to double from 6.75 per cent of trade today to 13 per cent by 2013, and is positioning John Lewis as a multi-channel retailer. But he warned: “The challenge is to obtain the same profit from it as from conventional retail sales.”

And in the short term the collapse of sterling vis-a-vis the dollar is a worry for an industry that sources globally and pays in dollars. “Nearly all retailers have hedged their exposure up to July,” Street said, “but the question after that is will it be swallowed in the supply chain, will retailers swallow it themselves or will it be passed on to the consumer?”

“Costs are under pressure, and retailers are having to be ingenious to survive,” he concluded. “The simple message to the property industry is that it’s imperative we work together to achieve a step change in our thinking on service charges.

“We also need to work collaboratively with the government on rates. But if that happens, rental values at least may hold up.”