Retailers continue to give us an interesting picture of how consumers are thinking in the UK at the moment. The marketing experts at John Lewis have recovered from a terrible drop in sales in the first half of 2011, to post a reasonable result for the full year. In September the business reported a 55% drop in operating profits and attributed this to pressure on margins and increased expenses due to new store openings. After a bit of a recovery in the second half, the full year operating profits were down 20%. At the top line, comps were 0.6% down with online sales up 26%. The online figure is in line with the market, but it does show that the business is not being left behind by the e-commerce boom.

Flat sales probably reflect weak consumer confidence, but it will be interesting to watch data over the next few months. An alternative explanation could be that in the minds of shoppers the department store concept is showing its age. In the past the value of the never knowingly undersold tag emphasised good value and saved the store from the collapse in footfall that other department stores suffered from. If that value has been re-defined in the recession then John Lewis could be starting to become less relevant to shoppers. Although this is speculation at the moment, the money that they have had to invest in the NKU promise this year has been put at £24 million. In the worst case scenario this promise might become and expensive tactical stick for consumers to beat them up with and a strategic failure in that it no longer supports a viable positioning.

Meanwhile, over at sister brand Waitrose sales comps were 4% ahead. We have not been able to find a figure for their online sales growth so far. Operating profits were off 6% due to investments in new store openings and also pressure on margins as sales of Waitrose Essentials becomes a bigger part of the basket and Brand Price Match hits margins. This part of the business appears to be in more robust health and we should remind ourselves that Waitrose profitability is second in the UK only to Tesco.

These two brands are coming off the back of a few years of very successful growth, so we need to be cautious in reading too much into any drop in performance. However the unusual ownership model of the business means that the usual accountability and scrutiny does not apply here. Management are responsible to staff and not to shareholders and staff probably like things at John Lewis just the way that they are. This puts even more responsibility on management to make sure that they not left behind by a strategic shift in consumer attitudes.