London department stores convert retail space into offices

Facade of John Lewis department store in London

John Lewis has been given the green light to convert no less than 45% of its flagship store on London's famous Oxford Street into office space. The conversion should help to make the department store chain profitable again.


Exceptional circumstances

John Lewis has been present in the British capital since 1864, but has now been given permission to drastically reduce the size of its flagship store by the Westminster City Council. The city council's argument is 'exceptional circumstances', writes RetailGazette. The retailer can now convert 45% of the retail area into office space, which in practice means floors three to eight of his Oxford Street branch.

Currently, kitchen and bathroom products, electrical appliances, children's toys and books are concentrated there. In the future, the retail area would comprise only the basement, the ground floor, the first and second floors.

Last week Debenhams also received planning permission to partially convert the fourth and fifth floors of its flaghip store in London into offices. Who will rent all these new offices is less clear, as the corona crisis is also making itself felt in that market.


Downsizing stores

Nevertheless, partly thanks to this conversion, the department store chain hopes to make the company profitable again. In the first half of this year, the parent company of John Lewis and Waitrose recorded a gross operating loss of 55 million pounds (61 million euros), a figure close to the same period a year earlier.

Sharon White, Chairman of John Lewis, said earlier that she would be looking at downsizing stores. She then suggested not only converting them into office space, but also converting some stores - partly or completely - into rental properties.

The idea of reducing the size of the retail network is also alive and well with other retailers. Even before the corona crisis, large chains were optimising their square metres, as visitor numbers and returns from physical stores have fallen sharply as a result of the rise of e-commerce. Omni-channel players such as Amazon therefore choose to use physical retail space as logistics hubs and distribution centres, while chains such as H&M choose to close underperforming outlets. The corona pandemic and the further shift to online are accelerating this trend.