Are you being served?
Australian retail giant sets up in Auckland
The boss of one of Australia’s largest department store chains says department stores are getting smaller and 20,000 sq m outlets no longer work for consumers and retailers.
David Jones, which in recent months has been struggling with plunging sales across the Tasman — its profit halved in the past financial year — has already announced it would close some stores, and drastically shrink others.
Operating profit at David Jones dropped from $A64 million ($68.2m) to $A37m in the past financial year. Its earnings before interest, tax, depreciation and amortisation declined by 18.9 per cent.
The South African parent company of the upmarket department store, Woolworths Holdings, in August slashed the value of David Jones by A$430m — to $985m.
The company bought the retailer for A$2.2 billion in 2014.
But David Jones is confident growth can be had in the New Zealand market.
It will today open its first Auckland store in ASX-listed Scentre Group’s $790m Westfield Newmarket development after entering the New Zealand market in 2016.
The 7000 sq m store will house more than 400 international, Kiwi and Australian high-end brands including Carla Zampatti, La Mer, Grown Alchemist, Kenzo, and emerging New Zealand brands Wynn Hamlyn and Harris Tapper.
Key features include personal shopping and VIP suites, by
appointment beauty treatment rooms and Gucci’s first beauty kiosk.
Ian Moir, chief executive of David Jones, said the retailer had invested “tens of millions of dollars” in the store and believed it would “do incredibly well”, particularly in the beauty category.
The Auckland department store has been more than three years in the making. It had originally planned to enter the market in Auckland but because of real estate available first launched in Wellington.
The Wellington site, which once housed the Kirkcaldie & Stains department store, is slightly bigger than the Auckland store, though Moir said he expected the Auckland store to “trade better”.
Moir said David Jones had no plans to open further stores in New Zealand, but was open to the idea — depending on how the Auckland store was received. “New Zealand will be an important market for us, I think this [store] will really work.
“It makes such a big difference having scale — it makes it more costeffective, distribution is easy, all sorts of economic benefits as soon as you go to scale so we’re excited we’re opening this, on top of Wellington, and let’s see how successful this is and we’ll think after that.”
Moir said 7000 sq m was about “the right size” for department stores. The chain is moving to reduce its footprint of existing stores in Australia by 20 per cent by 2026.
“It’s [now] about a much more luxe offering, a more edited offering and more appealing, engaging and enjoyable experiences in stores, where you don’t feel overwhelmed by massive space and volumes,” Moir said.
He said David Jones would keep a number of larger “flagship” stores, but would shrink most of its outlets.