David Jones, certainly one of Australia’s most recognizable manufacturers, has a brand new proprietor and it might imply modifications are coming to the division retailer chain.
Australian non-public fairness agency Anchorage Capital Partners announced on Monday that it had acquired David Jones from earlier house owners, South African-based Woolworths Holdings Restricted (which has no connection to Australia’s grocery store chain).
Again in 2014, Woolworths bought David Jones for $2.1 billion and whereas we do not understand how a lot Anchorage paid for it, reviews declare it was considerably decrease.
Asaffiliate professor of finance at RMIT’s College of Economics, Finance and Advertising and marketing, Angel Zhong, stated whereas Anchorage could have purchased David Jones for a fraction of the worth Woolworths paid, it is doubtless as a result of a number of David Jones shops have closed.
The golden age of department shops is over, Dr Zhong stated.
Nonetheless, Dr Zhong and Gary Mortimer, an professional in retail and shopper conduct from Queensland College of Expertise, have a couple of concepts on what Australians can anticipate from David Jones below Anchorage’s possession.
A premium experience
Professor Mortimer said David Jones could sell a luxury experience, along with luxury products.
Although he doesn’t think Australian consumers will notice anything “structurally different” in the next couple of years and the brand itself won’t change, he said there would likely be a few areas Anchorage will invest in.
“I think consumers will be looking for investment in staffing, and really returning this 180-odd-year-old department store back to this high-end luxury, premium shopping experience,” he said.
Department stores such as David Jones and Myer are now essentially smaller versions of what shopping centers offer.
Back in the heyday of department stores, they had a variety of brands under one roof.
“That’s what attracted people through that front door. But you know, when you walk into say Bondi Junction, or Parramatta, many of those big brands that we look for have their own independent specialty stores,” he said.
For that reason, he said there is no compelling reason for shoppers to get lost in a department store.
To get around this, David Jones could offer a premium experience to shoppers and adopt practices from department stores overseas like Harrods in London.
Perhaps shoppers could be offered Champagne upon arrival, or have access to personal shoppers to help them make their purchases from exclusive brands.
“I think shoppers want that experience, because if it’s just about buying men’s business shirts at 40 percent off, I can do that online,” he said.
Australian shoppers are aspirational, Professor Mortimer said.
“They wish to aspire to that have the place it’s extremely totally different to sitting at dwelling, in your sofa, merely buying in your smartphone,” he stated.
To do that, Anchorage would want to reinvest in employees and fitouts, whereas in all probability closing a couple of extra “loss-leading” shops.
Dr Zhong stated the potential for a luxurious expertise in a David Jones retailer can be depending on how nicely Australia comes out of the cost-of-living disaster.
Australians could be aspirational, but when David Jones was to offer an expensive buying expertise, it might threat isolating its target market, she stated.
Though this may goal folks with “massive buying energy”, she stated this could solely be a small a part of the market.
Digital transformation ‘essential’
There is no denying on-line buying is a drive to be reckoned with.
Accelerating David Jones’ digital transformation will likely be essential if it desires to take care of its dominant place inside Australia, Dr Zhong stated.
COVID accelerated the transfer in direction of on-line buying, giving folks the choice to maneuver away from bodily shops, she stated.
The price-of-living disaster and inflation solely gave shoppers extra motive to skip department shops in favor of discovering a cut price on-line.
Dr Zhong stated Anchorage would have executed the analysis and labored out areas the place David Jones is not doing too nicely.
“As a way to compete with different rivals for shoppers, I feel there will likely be higher choices of merchandise and [a better] expertise for Australian shoppers,” she stated.
“So total, I feel that is excellent news. It is time for somebody to refresh this previous, nationwide model.”
Shops out of the suburbs
David Jones’ final annual report confirmed slightly below 25 % of gross sales got here from on-line buying, Professor Mortimer stated.
“If you [have] received nearly 1 / 4 of your revenue coming from on-line, then you definately begin to have a look at your belongings of bodily shops,” he stated.
“All you are doing is just cannibalising the bodily retailer websites. So you find yourself with, you already know, 40 odd shops, however 25 % of your gross sales is coming from a centralized on-line system.”
These shops usually have very lengthy leases, however each David Jones and Myer have began closing shops.
He believes there’s a future for the massive division retailer, but it surely’s not within the suburbs. As a substitute, it is with flagship shops within the CBD.
