Can Myer and DJs halt their slide into irrelevance?

More than just a shopping destination?

Rochecouste is one of the world’s leading authorities on place-making, which he defines as “the art and science of making authentic, vibrant, resilient places that are valued by their communities and admired by visitors”. He’s got the ear of many of Australia’s largest property developers. He and his team at Village Well have been part of the revitalisation of Melbourne’s laneways, and for the design of the Melbourne Central shopping precinct.

Years ago, Rochecouste was a store planning and design manager at the Bourke Street Myer, as well as the general manager of Chadstone shopping centre in Melbourne (considered the largest shopping mall in the southern hemisphere).

“Department stores have reached a crossroads – a tipping point,” he says. “There’s a context around that.” Rochecouste contrasts the department stores of today with the Myer family’s ownership of the store. The highly-philanthropic Myer family were pillars of their community, and their stores paid homage to these values. “They put gardens in their centres. They had community facilities. They had beautiful ladies and men’s rooms. They had magazines. They had food courts.

“All of this led to a sense of community.”

Rochecouste says today’s department stores are “beige” – removed from their community, lacking a sense of theatre and place, unreflective of Australia’s multicultural diversity, out-of-touch with the new values of conservation and environmentalism, and to top it off, curiously anonymous despite their expensive refurbishments. A cathedral to little more than consumption is easily replaced by online retail, he says.

Luckily for our two department stores, none of the experts LeadingCompany spoke to predict the collapse of David Jones and Myer. The more common view is of a slow slide towards irrelevance – one that can be halted through innovation and reinvention. Both David Jones’ Zahra and his Myer counterpart, Brookes, seem to realise this, if we go by their public statements. But admitting this is one thing – the road to recovery will rest on their execution.

Brian Walker, of Retail Doctor Group, doesn’t think department stores, or Australia’s in particular, are doomed. He says the chief offering of department stores – many brands under one roof – remains attractive to today’s customer. “But they need to reinvent.”

One way department stores are working to maximise their competitive advantage while minimising some of the associated costs is by operating more like a shopping centre.

“The classic model of retailing is to buy the product, stick it on the shelf, sell it, pay the supplier and hopefully make a profit,” Walker says. Now, David Jones and Myer sub-let floor space to brands, particularly in fashion categories.

“The point is the model is changing with regards to who bears the risk,” Walker explains. “Suddenly, department stores have defrayed their rental overhead, their staffing overhead, their inventory overhead, and they have all these new brands.”

Part of this vision is also the highly targeted use of customer databases, built up with the lure of loyalty cards. Increasingly, department stores also offer their own credit cards, which can earn a tidy profit. David Jones has a highly lucrative financial services division, which includes its joint-venture credit card with American Express.

Amped-up customer service is another part of the solution proposed by the department stores. David Jones is trialling a new mobile-payments system, where sales assistants will be able to process payments for goods away from cash registers, leaving them free to interact with customers.

Walker also points to what retail types call ‘omni-channel’ as the way of the future. An omni-channel retailer is one that delivers a consistent customer experience, no matter what ‘channel’ (website, mobile app or physical store) a customer uses. It’s a key part of the strategy of both Myer and David Jones.

But Ogden-Barnes doesn’t see omni-channel retailing as the saviour of the department store.

“It’s already happening with a majority of retailers,” he says. “It won’t save the day. If the department stores don’t do it, it’ll put them further back. It’s just one of the new costs of doing business – you just won’t be taken seriously by consumers if you don’t do it.”

Is having a strong brand enough?

One thing Myer and David Jones have going for them is strong, trusted brands. They’re such a part of Australia’s history that it’s hard to imagine them ever not being there.

But that won’t save them, Ritson says.

“If you have strong heritage and use it in a contemporary way, that’s an advantage to you,” he says.

“But if something has strong brand heritage without a contemporary side, consumers become overwhelmed by nostalgia. The brand is deemed well-loved but old-fashioned. And that’s a killer.”

This story first appeared on LeadingCompany.