Weekly trading figures released by John Lewis Partnership for the first half of the year show the effects of the credit crisis, rising commodity prices and consumer gloom on the retailer’s sales and profits.

Like the rest of the high street, the partnership, at No 3 on the Sunday Times Deloitte Top Track 100, has been hit by tough conditions. Sales at John Lewis department stores in the Bluewater and Brent Cross shopping centres on the outskirts of London have fallen amid an overall slowdown in the chain’s sales growth. There are also signs of stalling demand for nonfood items at Waitrose, although food and drink revenues have continued to flourish.

“Pressure from rising raw material and utility costs made 2007 a very tough year across the business,” said Waitrose’s managing director, Mark Price. “We have also sensed consumer dissatisfaction with price inflation. But we believe we will win through because we deliver strong service and quality across the group.” Revenues at John Lewis Partnership have grown about 5% so far this year against 10% last year, he added.

John Lewis is among 16 Top Track 100 companies that have agreed to take part in a study of the challenges facing Britain’s biggest private companies as the economic cycle turns. Sir Philip Green’s fashion giant Arcadia (No 13) and the family-owned construction contractor Wates (No 44) are some of the other companies we have canvassed. The research, by Fast Track in association with Deloitte, will be published later this year.

The leap in the price of oil and other raw materials, the shortage of skilled staff, the credit crisis and the perennial problem of red tape rank among the most pressing problems for the Top Track 100 companies. But as economic conditions worsen, these successful firms are taking prudent steps to maintain margins by improving efficiency. For example, despite pressure on profits from rising food prices, John Lewis continues to invest in its warehousing software to make its operations leaner. It is also developing its direct-delivery operations, John Lewis Direct, Waitrose Delivers and Ocado (where it has a stake), as well as its travel and financial-services arm, Greenbee.

Surprisingly, a shortage of capital is not proving a problem for most companies. Many had either secured credit lines before last summer’s crunch or they were funding their investments from cash flow. What’s more, unless they were backed by private equity, most of the firms we interviewed were not highly geared. But some did admit that they were postponing acquisitions until the borrowing climate improves.

For many of the Top Track 100 companies that took part in our survey, the biggest blocks to growth are record oil prices and the rising cost of other raw materials from steel to grain. The logistics group Unipart (No 34), with clients such as Vodafone and Habitat UK, acknowledged that rising fuel costs in a low-margin business were a big problem – one it must monitor closely.

Meanwhile, John Lewis and Somerfield (No 5) confirmed that they were feeling the effects of rising food prices, which, given the highly competitive nature of the supermarket sector, cannot be wholly passed on to the consumer.

Inevitably, one firm’s problem is another’s opportunity. Steel trader Balli Holdings (No 99) reported that strong demand and high prices were helping it to beat its targets.

The distribution business Palmer and Harvey (No 6), which delivers food, drink, tobacco and other goods to supermarkets, convenience stores and garage forecourts, has been hit hard by rising fuel costs. “With every 1p on diesel adding £100,000 to the cost base of the company, and the sharp price increases in other utilities, the past 12 months have been very tough,” said chief executive Chris Etherington.

However, Palmer and Harvey kept year-on-year revenues steady in the 12 months to April 2008 by introducing new products and services and improving operational efficiency. For example, the company launched the Kivertons Kitchen food brand and the NewsPlus service, which helps independent newsagents plan and manage their newspaper and magazine purchases.

Companies are also having to deal with a shortage of skilled employees. The housebuilder Gladedale (No 87) reported recruitment difficulties as it diversifies into mixed-use development and large-scale regeneration projects. Founder Remo Dipre is considering surrendering 10% of his equity for a bonus and option scheme for directors and senior managers.

Gladedale is one of many firms that said their customers had been hit by the credit crisis. The slowdown in the housing market, the contraction of the buy-to-let sector and the reduced availability of mortgages are all posing challenges.

The Top Track 100 companies we spoke to have clear strategies for maintaining growth despite pressure on sales and margins. Investing in operational efficiency during an economic downturn might appear counter-intuitive but that is how successful companies sustain their outstanding results. Deloitte’s consultants are increasingly involved in advising businesses on achieving operational excellence across various sectors.

A year from now we will know whether the present slowdown is a short dip or the start of a longer downturn. Astute managers like those at the Top Track 100 companies know that attacking inefficiency is the best form of defence against recession.

— Stuart Counsell, head of Deloitte’s private company programme, was talking to Catherine Wheatley

Explore Top Track 100

• Top Track 100 table