Me and Mr Jones
David Jones’s CEO, Paul Zahra, is pursuing a mantra of reinvention that responds to consumer desires while maintaining the 175-year-old department store’s core mission to sell the best at the best prices
David Jones’s Sydney headquarters opened its doors when the world was between wars, and the building combines an austerity well-suited to the times with an opulence that was not. The contrast is clearest on level 7. At one end is the palatial ballroom with round-arched windows more than 6m in height; the other, where Paul Zahra has his office, has been halved by a mezzanine. The chief executive enjoys a view over the canopy of Hyde Park towards a wedge of harbour through only the top of one of these glorious windows. But he does not, he tells me when we meet at level 7M— or seven-and-a-half — enjoy the view often enough. He is managing a company in transition as it marks its 175th year, and his sights are set elsewhere.
A man of medium height with a strong build, the Melbourne-born Zahra, who took the helm at David Jones in June 2010 — when he was group general manager of operations — has inherited a seemingly ageless Mediterranean complexion from his Maltese parents. He meets me in his office with a no-nonsense air, wearing dark grey trousers and a white business shirt with French cuffs. His gaze is direct and his message clear: “The future is bright, but we have to change. We’re doing all the right things.”
Founded in 1838 by the Welsh immigrant merchant who gave the store his name, David Jones is among the world’s oldest department stores in continuous operation under the same name. Jones’s mission was to sell, as he put it, “the best and most exclusive goods” and to carry “stock that embraces the everyday wants of mankind at large”. The enterprise quickly outgrew its first George Street premises, which were demolished in the late 1880s to make way for a much larger structure with a hydraulic lift — the closing down sale created quite a buzz in colonial Sydney.
In 1927 the building that houses Paul Zahra’s office opened at the corner of Elizabeth and Market streets. It has remained the flagship store ever since. With the company’s 175th anniversary pending when we meet, Zahra is acutely conscious of the span of the store’s history. “We’re an old brand with an amazing heritage,” he explains. “We’re actually older than Selfridriges and Harrods in London. We were built before the Sydney Harbour Bridge and the Opera House. Ours is a story of family, of commerce, of a brand that has endured two world wars. It’s quite a story, a story of tradition, and of change.”
To emphasise its evolution he notes that the store began with haberdashery items and school uniforms and grew into a true emporium of many departments that caters to “everybody’s need and fit in one location. It means that madam goes to the fitting room once”. Some departments, such as fashion, manage to thrive; others don’t. An example is the music, games and DVD category, jettisoned after a sales slump of 1.4 per cent during the Christmas season despite total revenue of $590 million. There is speculation electronics is next on the chopping board.
Among the changes that Zahra believes are “integral to the company’s success” is price reduction on imported brands in the teeth of stiff online competition. This is a delicate process as it means pressuring brands to remove the fat in the international supply chain.
“We’re asking our suppliers to remove the inefficiencies out of their distribution model so that they can get their prices in line with their international peers,” Zahra says with a firm tone. He is not talking history now; he is talking survival. “If brands choose not to reduce their prices, customers will vote with their feet in the first instance. And if product in our stores is not up to standard, those brands will be removed.”
A parallel strategy involves forging alliances with big international brands that allow them to sell in Australia in DJ’s retail space. The first of these alliances, announced last month, is with the Spanish fashion brand Mango, and it is understood that David Jones is in discussions with the prestige US chain, Brooks Brothers. Zahra is wary of offering details, but the discussions are clearly part of a global strategy to simultaneously trim prices and strengthen the physical store’s appeal to consumers who have a relationship with these brands through their travels and online purchases.
More broadly, he believes that the entry of new international players is “reigniting” inner-city shopping precincts and benefiting his own store by default. The change mantra is not, however, uncomplicated or onedimensional. The firm is attempting to manage change with an eye to its better traditions, to look backwards as
it rows forward. “Since the global financial crisis it would be fair to say that retail has had a very tough time,” Zahra explains. “That’s been particularly true at David Jones because we operate in that premium discretionary end of the market, so we’ve felt that pain quite a bit. I was appointed at a time of crisis and it was a great challenge.”
The crisis to which he refers is not only economic. Zahra, who has enjoyed more than 30 years of experience in the retail sector, almost half of it at David Jones, was appointed after the resignation of his predecessor, Mark McInnes, amid sexual harassment complaints by former employee Kristy Fraser-Kirk. It was a nasty moment for the prestige black-and-white houndstooth ‘‘brand’’. Action taken by Fraser-Kirk put the company in the headlines for all the wrong reasons and forced it to settle with the plaintiff for a reported sum of $850,000. Adopting the attitude that one man’s crisis represents another’s opportunity, he immediately began work on a strategic plan to reposition the firm in time for its 175th birthday this month.
“I was taking on the responsibility of managing a publicly listed company and I started to reflect on the
“The firm is attempting to manage change with an eye to its better traditions, to look back as it grows”
significance of a heritage brand,” he tells me. “As I went through the company’s archives I began to see how it has reinvented itself and transformed itself.” And so he hit upon a dual-track strategy to maintain the store’s bricksand-mortar presence, strengthen its flagship Sydney and Melbourne stores, which it owns, and simultaneously embrace the digital age. This gave birth to an omnichannel revolution that, he says, “completed 10 years of work in 10 months” and allows customers to interact with the store at its physical locations, at home, or on the move. A web store, launched late last year, saw a doubling in its first three months of online turnovers. “You see our thoughts about the store of the future clearly at Highpoint in Melbourne,” Zahra says. “This is what we’re calling a next-generation store and it has all the technology in place, such as free customer WiFi and traffic analytics.”
Clockwise from above: the first David Jones store on the corner of George and Barrack streets in 1838; Sir Charles Lloyd Jones, chairman 1920-58; the cosmetics department in the 80s; the ground floor in 1927