Kill Off The Department Store Label – Our March article for The Melbourne Review

retail brand agency

The challenging future of department stores in Australia.

April 2013
Peter Singline & David Ansett

There is much written about the challenging future of department stores in Australia. Both David Jones and Myer are household names with a rich heritage in retailing, but for many years their relevance in an ever-changing retail landscape is being questioned. In more recent years, the impact of the GFC, combined with enhanced competition from online players and strong international fashion retailers opening stores in Australia, means Myer and David Jones are facing significant head winds.

But it is a phenomenon that is not limited to Australia. Around the world the department store concept is being challenged. In March the Financial Review quoted the chief executive of Paris based department store Galeries Lafayette as saying that he was convinced that the department store format faces extinction. What is instead being proclaimed as the future for Galeries Lafayette is to position itself as a ‘multi-specialist lifestyle retailer’. Their aim is to build a house of brands under one roof that offers the best of French and international premium and luxury goods.

Back home David Jones has also been promoting a house of brands strategy. They, like Myer, need to do everything in their power to move away from the department store label. They need to create a more relevant description of what they represent to consumers, to define new meaning in the minds of their target market. Every time they are referenced as department stores in the media it conjures up an outmoded frame in which to view what they offer.

In years gone by when you shopped these stores, it was truly a department store. You moved from one floor or department to another with entire different types of merchandise. You went from toys, to another with furniture, to another with white goods, to another with furniture, to another with sporting goods, or electronic equipment, or fashion, or shoes and so on. Yes, we are stating the obvious, you know what a department store is, but that it is a by-gone paradigm – Myer and David Jones are no longer like that, they are not department stores that offer every conceivable household need. They have exited many categories and the rationalization will continue.

So what should the new label be that Myer and David Jones seek to create in terms of their market positioning. There is no doubt it has to have a fashion skew, as both retailers actively seek to build their credentials in this space with exclusive fashion brands. For Myer its private label brands such as Blaq, Basque, Piper and Tokito generate almost 20 per cent of its sales. At the same time it has been acquiring established fashion brands such as Trent Nathan and sass & bide.

While David Jones private label sales contribute only 5 percent of their sales, they are vigorously pursuing their house of brands strategy with a growing portfolio of exclusive brands. Their latest coup is the recently announced tie-up with Spanish high street brand Mango. Unlike Zara, Topshop and soon-to-arrive H&M, Mango will set up in David Jones, the first Australian alliance between a major department store and a high-profile overseas brand.

Myer and David Jones are both devoted to strategies that have fashion as its foundation. It is a strategy that makes good sense given their big store footprints and the fact that consumers are increasingly time poor. The one-stop shopping premise that underpinned the original proposition of department stores is still relevant today, however its focus needs to be narrowed, and fashion is a good option.

The fact that the number one shopping centre in Australia in terms of sales is Chadstone with over $1.3 billion in sales and nearly 20 million visitors per year. It is a shopping centre that is rewarded for its ability to choreography a wonderful fashion charged shopping experience. It positions itself as ‘The Fashion Capital’ and it works hard at continually evolving its offering and delivering on the promise.

However for Myer and David Jones it requires more than simply an assortment of different fashion brands for different consumer segments. There is a need to wrap the offering up with a greater sense of theatre, curatorial inspiration and personal service. David Jones has been positively upping the stakes in this regard. It recently live-streamed its autumn/winter fashion show to an audience of 20,000 customers. For the launch of their new spring/summer fashions in August they plan to go one step further by allowing customers watching the live stream to click on the images and purchase directly from the catwalk.

But some rightly suggest that the proposition’s of Myer and David Jones also requires a more socially aware orientation. In a recent article by online publisher Leading Company, Gilbert Rochecouste of Village Well (a place creation consultancy) said department stores cannot survive if they are monuments only to consumption. A cathedral to little more than consumption is easily replaced by online retail, he says.

Creating a higher order ‘reason for being’ requires some serious soul searching for both Myer and David Jones. There is work still to be done on their respective propositions, but there is no reason for them to delay creating a different description of what they represent. Kill off the department store title, and embrace something far more aligned to fashion or style. ‘Fashion Emporium’ would be far more relevant, but even that feels a little to old-fashioned.

David Ansett and Peter Singline
Peter Singline and David Ansett are co-founders and direc­tors of Truly Deeply, a Mel­bourne based brand strat­egy and design con­sul­tancy.
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