David Jones half year sales dip, though customers show up online
South African-owned David Jones saw same-store sales fall during the first half of FY20, though online grew in leaps and bounds, according to a trading update from parent company Woolworths Holdings.
Comparable store sales fell 0.4 per cent over the half, which includes strong online growth of 61.8 per cent. Online sales rose to 10.4 per cent of total sales.
And while prior periods have seen sales impacted by the ongoing refurbishment of Sydney’s Elizabeth Street flagship, the more frequent opening of levels for trade, including womenswear and beauty and accessories, have minimised the effect. The flagship is still scheduled for completion by the end of 2020.
Despite having closed several stores over the period, David Jones’ net space increased 1.2 per cent over the half.
“As the contribution from online sales increases, the reduction of unproductive space remains a priority in David Jones and the Country Road Group,” Woolworths Holdings wrote in its trading update.
Stablemate Country Road saw comparable sales grow 0.1 per cent, while online also grew 6.2 per cent to account for 21.4 per cent of total sales across Australasia.
Total sales in the fashion retailer fell 2.5 per cent, though excluding the impact of David Jones pulling Country Road from department store competitor Myer sales improved 3.3 per cent.
The impact of Ian Moir taking the reigns as permanent chief executive officer for David Jones isn’t likely to be seen until the second half, though Moir has been leading the business from afar since February 2019 when ex-CEO David Thomas stepped down for personal reasons – making it unlikely Moir will bring a major shift in strategy to the department store in the short term.
Department stores under fire
While David Jones is one of Australia’s longest running retail chains, it has increasingly been under pressure from shifting consumer expectations and buying habits – a fact that has seen the business’ valuation to around $965 million, down from the $2 billion Woolworths Holdings initially paid for the chain.
“Department stores have particularly struggled being somewhat in the middle: not large enough to compete with online and international players, and not niche enough or targeted enough to compete with independent and specialist retailers,” said Swinburne University lecturer of marketing Dr Jason Pallant.
“I think this is more of an indication of a shift in the way we are shopping, away from the department store, and towards a combination of niche brands with online.”
Despite this, Pallant said David Jones’ approach of having fewer flagship locations and supplementing it with a growing online offer could be the right decision in the long term.
“[This approach] fits well with current trends and the experience economy. The challenge then is going to be supporting those flagships with solid online fulfilment, or smaller stores for others who can’t get to those major locations.
“Personally, I think for DJs, and all department stores, it’s about finding a unique proposition for shoppers, which is easier said than done.”