DJs’ cunning move against Myer
DAVID Jones has dealt Myer a huge blow in the department store wars, pulling out a raft of well-known brands and concessions it controls from its rival retailer.
Outside of their stand-alone stores, Country Road, Mimco and Politix will now be available only from DJs.
The brands, all of which have a substantial presence in Myer, will be progressively removed from its stores nationwide in the coming year.
Both DJs and Country Road Group are part of South Africa's Woolworths Holdings (no relation to Australia's Woolworths Group). As such, the decision is no surprise but it does eliminate a lucrative revenue stream for David Jones, which was effectively earning money from people shopping in its archrival.
But the loss is larger for Myer, which will now have a huge hole in its womenswear and menswear offers - the most crucial battleground for both retailers.
It's another fashion blow to Myer. Just last year, they had to strip out Topshop concessions when the UK retailer vastly scaled back its Australian operations.
The Topshop shelves, stripped of branding, became racks for sale items.
Myer said it was "looking forward" to announcing "exciting" new fashion brands in the coming months.
David Jones said the move to pounce exclusively on Country Road was part of a strategy to, "offer Australia's most iconic brands".
But like Myer, DJs is struggling. On Thursday Woolworths Holdings' announced profits at DJs had sunk by half to $63 million.
Sales at David Jones fell by almost 1 per cent as revenue slumped 3.8 per cent to $1.6 billion.
Woolworths is ploughing billions into its Australian off shoot sprucing up stores, adding posh food halls and it is in the midst of a huge transformation of its Sydney flagship store that will include an entire floor dedicated to shoes, a dedicated Disney experience and a champagne bar with views across the city.
"This is part of David Jones' strategy to drive an exclusive and differentiated department store experience and customer offering," the company said about the Country Road move.
DJs has also secured new exclusive partnerships with fashion brands Kenzo and Scotch & Soda, both of which are stocked by Myer. They too can be expected to exit Myer soon.
David Jones' chief executive officer, David Thomas said: "The exclusivity of Country Road, Mimco and Politix to David Jones will be a major step in differentiating our unique brand portfolio and providing our customers with an unrivalled department store experience".
A Myer spokesman told news.com.au they planned to replace Country Road in stores.
"We are focused on bringing our spring/summer collections to our customers and are in active discussions with new and exciting brands to add to the Myer offer. We look forward to making announcements in this space over the coming months."
Market researchers IBISWorld have said DJs' move up-market could backfire with customers increasingly "bargain hunting". Kmart and Cotton On were now in fashion.
"Both David Jones and Myer have failed to retain consumer expenditure amid rising competition from online-only retailers, fast fashion retailers and largely negative consumer sentiment over the period," said senior industry analyst, Ms Kim Do.
The fashion market was undergoing a period of "polarisation," Ms Do said, shoppers were going to either discount or up-market stores, deserting the middle market.
But while that should be a boon for a luxury departments store like DJs it was now coming eye-to-eye with the stand-alone stores of the likes of Chanel - brands it already stocks.
"As David Jones positions itself as an up-market department store, the company has also faced direct competition from an influx of international luxury brands entering the Australian market.
"Consumers have opted to purchase their luxury goods directly from these brands, rather than through the department store," said Ms Do.
Nonetheless, DJs will hope its move will give brand conscious shoppers more reasons to walk through its doors than its arch rival at the other end of the mall.