Consumer Watch: Partnership the key to success as John Lewis bucks trend VALUE, assortment and service helps stores group to weather the economic storms as competitors suffer, reports Claire Smith The first thing you see in what is known as the "partners entrance" of John Lewis is a big red sign which reads: "The partnership's ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business." It is the kind of notion you might expect to hear from the Dalai Lama rather than from a leading high street business - but what is known as principle 1 is at the very core of the John Lewis Partnership. And interestingly, at a time when other retailers are suffering, when shops are lying empty and footfall and sales are falling, the John Lewis model is bucking the trend - with the most recent sales figures showing a 17 per cent increase on last year. New general manager of the Edinburgh store Barry Blamire says: "It feels like a different way of doing business and we think it's a fairer way of doing business. It has proved itself over the last 100 years. Blamire has been at the flagship store in the capital for three months. He has spent his entire working life with the John Lewis Partnership, starting as a graduate trainee on the button counter in Newcastle. As we walk around the store it is clear Blamire is a hands-on kind of man. He cannot stop himself from straightening the towels: "Former manager of a linen department - it never leaves you." And he leaps in to help a woman in bathroom accessories who is looking for a particular kind of mirror. Having been with the company man and boy, Blamire is immersed in its culture and language - talking excitedly about what he calls "VASH" which apparently stands for "value, assortment, service and honesty" and saying of John Lewis's online success: "We are very much a bricks and clicks operation." He agrees the company has its own very particular way of doing business but says: "It's not a cult." Customers may notice John Lewis has Clearances, rather than sales and that the company prides itself on a commitment to matching the cheapest available prices for similar products. Never Knowingly Undersold is a principle of the business which dates back to the 1920s. But what really makes John Lewis different is its economic model. The company is owned by its employees - and when it does well everybody benefits. Analysts believe the freedom from the demands of shareholders is one of the things which has contributed to its economic success. It also means the company has a huge proportion of long-serving members of staff. Barry Blamire explains: "The business is a partnership which is held in trust for the partners. We are all co-owners. The notion of a company owned by its employees dates back to 1925, when John Speeden Lewis, son of the original John Lewis, who founded the original store on Oxford Street, London, was confined to bed after a serious accident. Blamire says: "He was a social visionary. He was recuperating from a riding accident and he had a lot of time to think. He started to find it incredibly unjust that he, his father and his brother took so much more out of the business than its employees. That is when the thought came to his mind about a different way of doing business. John Speeden Lewis worked a scheme which would hand over the business his family had built to the people who worked there. As well as handing over the family business, he also decided to sign over his family's country estates - which today are still used by the company for management training and conferences. The first trust agreement was signed in 1929 - at the height of the Great Depression - and ever since John Lewis has not had employees but partners. Barry Blamire has more than a touch of Willy Wonka about him when he starts talking about the annual ceremony when the profits are revealed. "It is a great moment," says Blamire. I have no idea what is in the envelope. Everyone gathers together and we choose one of our partners to open the envelope. Each partner receives the same percentage of their earnings - whether they are part-time or full-time. It is usually equivalent to about seven to eight weeks" pay." He says: "There are some great stories about how people use their bonuses. It is hard to save up two months" pay. Partners can use it for holidays, to buy things for the home, to pay for weddings. Of course, some people use it to pay off debts. One third of the profits from the 29 John Lewis stores, the 285 branches of Waitrose and the nine At Home stores is handed over directly to the partners. One third goes to the final salary pension scheme and another third goes back into the business in the form of investment. Last year the company gave away £1,94.5m to its partners after recording a 20 per cent leap in pre-tax profits to £367.9m and announced plans to create 4,300 new jobs. Being able to plough a third of the profits into long term development of the business is one of the reasons analysts believe John Lewis has been able to weather the current economic storms. Neil Saunders, director of Conlumino retail analysts, says: "John Lewis is outperforming the retail market as a whole by a significant margin. In the last 21 weeks its total sales have grown by almost 13 per cent, the retail market as a whole has seen growth of around 3 per cent. Like-for-like sales at John Lewis are also outperforming, up 9.6 per cent over the same period. John Lewis is on a high because its reaping the rewards of past initiatives as well as investing in new innovations. Its business model allows it to take a long term view. It still has to be commercial, but it is not buffeted by the short-termism of investors or the stock market. In this type of economy, that's an invaluable advantage. There's something very wholesome about John Lewis. It represents a nicer, a better way of doing business.