David Jones new store format a relevant addition to the retail landscape
The David Jones brand has significant equity as a premium quality retailer in Australia. However, what it and its key competitor Myer have both been struggling with in recent years is the legacy of the old department store model. They have for too long carried low margin categories (white goods, electronics, etc.) that shoppers have long ago decided were better sourced from specialists.
It therefore makes infinite sense that David Jones should turn to smaller retail formats that are skewed to the categories that offer good margins. Last week in the up market Melbourne suburb of Malvern they opened their new ‘village’ small format store which is largely a fashion and beauty offering. The new store format devotes 75% of their floor space to these categories. They also wrap around it a more contemporary technology environment, including complimentary Wi-Fi, an internet cafe and an interactive mirror that sends photos across social media platforms, to give customers immediate fashion advice and feedback from friends on Twitter or Facebook.
The net effect is a David Jones experience on offer that is focused and relevant. What will be interesting is whether the better gross profit per square meter on offer to David Jones if it is successful, will translate into the capacity to fund an enhanced customer service offering. Currently competitor Myer has analysts decreeing that they need to up floor staff by at least 10%, David Jones should likewise be re-thinking its service model.
From a brand management perspective, David Jones new format store raises some interesting thoughts to ponder. First and foremost is the question that we should all be pondering, and that is are there any legacy models that we are continuing to serve simply because as a business we are invested them, but from a market perspective they are losing their relevance. In so many businesses brands are the manifestation of a wider business model, and therefore a shift in brand strategy may require the whole business to change its operational model. If this is the case then the wish to stick with legacy investments, rather than change, can be a powerful hand brake on the business. However, any seemingly short term protection for the reputations of the management behind any out dated legacy models will eventually be over run by market forces as business performance declines.
David Jones has nothing to lose and everything to gain by trailing a new format.