Years ago their used to be 23 different department stores in Australia, all country people will remember the Co-op stores in town. Nowadays there are only the two big retail giants in Australia, David Jones and Myers. Both are struggling to compete with the changing nature of the retail sphere, with shoppers preferring online convenience over the large, one shop fits all model that Myer and David Jones have adopted for years now.
Their declining profits have even led to their market value written down to nil book values.
So can the two department stores regain the favour of its customers, or has the landscape changed for good. Barry Urquhart from Marketing Focus says the businesses need to accept the change and focus on new strategies to engage shoppers.
“We have a situation where many of the manufacturers, suppliers and distributers of products are now starting to determine that they’re going to be selling to consumers direct rather than going through department stores and retail stores, and that is a very big clear call to all people in business, supply chain is the industry that you’re in, don’t put yourself into a category like department stores.”
A world without Myers and David Jones is indeed possible, insists Mr. Urquhart, although it is more likely that the two will develop and change business strategies to remain alive.
“We have David Jones coming back into food and Myers starting to think about, well hold on we’re going to start sub-leasing premises so there will be stores within stores, you’re going to have shopping centres that will be selling motor cars, so you won’t have car dealerships in the high streets of Esperance and Albany, Bunbury and right through to Perth, you’re going to be able to go into your shopping centre and get a motor car and finance. Banks are going to be more of a stand up, pop up situation… it’s a very changing market place which will accelerate in the near future”
It may sounds extreme and technology that isn’t achievable but Barry says you’d be surprised.
“You’re going to have virtual reality, you’re going to be able to look at, sit in and watch yourself sitting in a motor car when you’re not really in a motor car!”
He says high street retail already use virtual reality so customers can “try on” garments and different styles without having to actually try on the stock that may not be in store.
The change will have a remarkable effect on the Australian working sector. Currently, 79% of the working class of Australia are in the service industry, with high street retail itself the biggest employer with over a quarter of a million Australians working in that space. Barry predicts that number will drop significantly and retail will no longer be the biggest employer in Australia, as of 2025.
For the full chat with Barry and Marketing Focus please consult the Catch Up link below from the Sean for Breakfast program (the interview is towards the end of the audio!)