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In an otherwise normal meeting room at the John Lewis Partnership head office, two headless, gold mannequins are propped up against the wall. They are bathed in bright lights of varying strengths, dressed in bizarre combinations of patterned shirts and scarves and naked from the waist down. Their presence is highly unnerving.

It鈥檚 an experiment, apparently. An experiment to see which new LED light - one narrow beam and one wide beam, in case you were wondering - makes the products look more enticing to customers. As a spectacle, it鈥檚 quite amusing. But the experiment really represents the battle that real-world stores are facing as they struggle to survive in an increasingly online marketplace. The tiniest detail, right down to a decision between a spotlight or a warm glow, could make all the difference.

Tony Jacob, head of construction engineering and environment at John Lewis and Waitrose, knows all about the challenges facing the retail sector from a development perspective. The tough economy, coupled with the change in customer shopping behaviour, is taking its toll. Jacob had to 鈥渄isappoint a lot of supply chain members鈥� last year when the number of construction projects across the portfolio slowed down heading into 2012, and he is now looking to reduce spending on consultants by 30%.

But put into context, the situation at John Lewis Partnership, and Waitrose in particular, is far from disastrous. Waitrose is the fastest growing supermarket in the UK and 2012 still looks set to be a strong year for the group, following on from a record 8.7% rise in sales in 2011 and an increase in property investment from 拢48m to 拢150m. The plan is to double the supermarket鈥檚 property portfolio within 10 years through a mixture of identifying which physical stores are still popular with customers, and developing a host of entirely different types of scheme, such as distribution facilities and call centres to support mobile shopping.

Jacob expects that the development pipeline of 拢600m spent over the last four years on Waitrose stores alone could be replicated over the next four. The trick to getting in on the action is proving that, in one of the most unpredictable sectors in construction, you can deliver the goods with the speed and efficiency of a jet-propelled Ocado van 鈥�

Pipeline puzzle

There is no doubt that, as Davis Langdon reported in these pages in April (20 April, page 48), the retail sector in general is going through a 鈥渢orrid time鈥�. The number of retailers going into administration in the UK was up 15% in the first quarter of 2012 compared to the same period a year earlier, according to Deloitte, and shopping centre space completed in 2012 will be the lowest since the sixties.

Much of the pain is being felt along the high street, with smaller independent retailers bearing the brunt. But the bigger companies have not been immune and the construction industry is getting caught in the fallout. In April, Marks & Spencer announced it was cutting 拢100m from its 拢600m store refurbishment programme and Tesco revealed that it was slashing its store expansion by over a third, cutting expenditure by 拢50m to 拢3.3bn.

Comparatively, the John Lewis Partnership is faring well - but as department store construction continues to be hit exceptionally hard through the rise of click-and-collect services and online shopping, much depends on the performance of Waitrose. And this is where much of the construction work is likely to be over the next few years, thanks to an expansion plan that Jacob says is still being backed, although he does add that 鈥渢he days of the space race and growth at all costs鈥� are probably over. Instead, this is what he calls 鈥渘o regrets growth鈥� - carefully pinpointing what type of store is needed where, to ensure that it makes a return no matter what.

Waitrose has changed its strategy over the past year to suit our straitened times, focusing more on price-matching competitors and becoming more accessible across the whole of the UK. 鈥淲e have gone from being a very niche player in the South to a bigger player around the country,鈥� says Jacob. 鈥淲e have a big focus on convenience and over the last three years we have rolled out 50 of these stores, including extending to work with Welcome Break at service stations, and we鈥檙e now trialling two forecourt stores with Shell in Watford and Kensington.鈥�

There is an open door for companies. But you have to prove you are as good as or better than everyone else

He adds that now is the time to drive Waitrose鈥檚 expansion plan forward - especially in Scotland, the North, the Midlands and Wales, where there is little existing presence: 鈥淲e are really targeting property searches now and I would expect us to be doing 10 convenience stores a year, plus a number of larger schemes. Last year we were the busiest ever and we have climbed down from those peaks this year, but we are still on a very steady growth trajectory and our construction spend is hundreds of millions.鈥�

Jacob won鈥檛 be drawn on an exact figure over the next one-three years, apart from saying he hopes the 拢600m spent over the last four years can be repeated. This reticence is, he says, due to the fact that, for the first time he can remember, it is genuinely impossible to predict what will happen next in terms of customer behaviour. The best John Lewis Partnership, and its competitors, can do is try to keep up - which is exactly what Jacob is now focusing his attentions on.

The virtual world

The Office for National Statistics (ONS) revealed this year that 拢1 in every 拢10 spent in the UK is now spent online and the levels of online shopping have risen by 10,000% since 2000.

It is clear that times are changing fast and Jacob says that every retailer, big or small, needs to be 鈥渦tterly on their game鈥� to keep up. 鈥淲e鈥檝e got to find a way of being available at all times,鈥� he says. 鈥淪o we are pushing our online strategy hard, which results in different construction opportunities. When I joined this business in 2004 it was to build and refurbish big department stores and big Waitrose stores. Now, not only have the store sizes and priorities changed but my whole remit is different. Now I am building call centres, conference centres, distribution facilities and so far, one 鈥榙ark store鈥�. This is a warehouse space which is laid out like a store inside [so that staff called 鈥減ickers鈥� can collect the goods for online customers]. We reuse kit and it doesn鈥檛 even nearly meet our branch standards. But you don鈥檛 need it to in terms of the look, as customers are only there in the virtual world.鈥�

But what does the future hold for new department stores, which are, after all, John Lewis鈥� flagship? This is an area within retail that is suffering severely - neither offering a community shopping experience such as a small convenience store, nor the full Westfield-esque entertainment experience of hours of fun under one roof, with cinemas, bars and restaurants.

鈥淭hese are interesting times for John Lewis,鈥� says Jacob. 鈥淭he aspiration is to maintain our full line presence and we are committed to developing our new 拢100m project in Birmingham as part of the New Street Station redevelopment. We are also very hopeful we will get a presence in Leeds. Plus, our experience has been that wherever we have a physical shop, we sell more online, as people know and understand the brand.鈥�

Winning the work

So, the work is there, according to Jacob. But winning it won鈥檛 be easy. Waitrose and John Lewis are famous for building up long-term relationships with suppliers, and a record 2011 that will not be repeated this year has meant a reduction of the supply chain already. But there is still 鈥渉undreds of billions鈥� to be spent on the construction of Waitrose stores, and opportunities to work on the data and distribution centres springing up as a result of online shopping. And, says Jacob, the doors are wide open to the right, fresh firms as there is no formal framework of suppliers.

鈥淲e believe in long-term relationships but we have a business to run and so firms win and lose work based on performance. Over the years, there has been a loss of people from the supply chain and so there is an open door for new companies. But you have to prove you are as good as or better than everyone else. We expect clear commercial discussions, clear delivery to programme, a safe working environment and strong environmental credentials.鈥�

He adds that innovation and an understanding of technological advances, such as 好色先生TV Information Modelling (BIM), is also a must on his supply chain tick list: 鈥淲e actively use BIM as a tool,鈥� he says. 鈥淚t helps us in what we do and along our carbon reduction journey. We are also very much looking for people who understand that it鈥檚 no longer just about building or redoing a facility and walking away, but about thinking of the impact of the building in terms of its whole lifespan.鈥�

While considered one of the friendlier of the retail clients to work with, Jacob鈥檚 main thrust now is to strip out unnecessary costs by working with fewer consultants and cutting the amount spent on their fees by 30% - 鈥淏efore consultants raise their eyes to the ceiling, it鈥檚 about how we can better use our supply chain and avoid unnecessary work鈥� - not over-specifying and tightening up procurement.

So that鈥檚 Jacob鈥檚 message - work to be won, although not without a fight from a firm-but-fair client in an almost impossibly fast changing market. Good luck and God speed.