Struggling department stores wresting back online shoppers

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October 13, 2012 /
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THERE’S no fun in online shopping, say struggling department stores, who are now fighting back.

Twenty years ago one-in-three South Australian households had a John Martin’s card and visiting the Magic Cave in its Rundle Mall store was a rite of passage for every child.

But now, consumers are turning away from Australia’s two leading department stores Myer and David Jones.

Both need to find a way to get customers spending after reporting their full-year profits fell by 13 per cent and 40 per cent respectively.

University of Melbourne social sciences lecturer Dr Lauren Rosewarne said they were suffering because shoppers were buying from overseas online sites where goods were cheaper.

However, Village Well founder and chair Gilbert Rochecouste, a consultant who worked on the Rundle Mall master plan, said there was a contra trend to online shopping that presented an opportunity for department stores.

“People just don’t want to sit on their computers and buy stuff and stay at home and get it delivered . . . we want to hang out with other human beings,” he said.

Mr Rochecouste said if big stores re-created “the theatre of retail” that had been lost over the years, they could be successful like US chain Nordstrom.

“Great department stores knew retail, customer service and created environments where people would be dazzled and welcomed . . . where the customer was king,” he said.

“Even the value customer wants a great experience – they’re spending $10 but they want the billion-dollar experience.”

Myer and DJs are banking on reinventing themselves and, no doubt, looking to successful foreign stores to see where improvements could be made.

As the Sunday Mail reported earlier this year, a $20 million makeover is planned for Myer Adelaide City.

Harris Scarfe is also due to open a new city store by mid-March as part of the $385m Rundle Place redevelopment. Harris Scarfe marketing manager Chris Kontos said the flagship store would take design to the next level, with features including themed-fitting rooms.

“There will be a large emphasis on visual merchandising to create a look and feel that has yet to be experienced in Adelaide,” he said. “It’s going to be an exciting shopping experience which will set Harris Scarfe apart from the rest and make this store our flagship store.”

The Myer upgrade, which is due to start in February, will result in a downsizing of the department store.

Myer chief executive Bernie Brookes has said the store would operate from fewer levels after refurbishment of

the premises that had been leased until 2030.

Myer general manager corporate affairs Jo Lynch said plans for the Adelaide City update were in the early stages but would include redesigned fitting rooms with a dedicated personal shopping service and easy to locate sales counters.

Retail consultancy Urbis’s research director Sue Say said such upgrades would be welcome because outdated fitting rooms were a common complaint.

Myer and DJs needed to concentrate on cosmetics, apparel, accessories, footwear and homewares and their home or exclusive brands, and focus less on beds and electronics, she said.

She said Myer and DJs had “missed the boat” when it came to establishing themselves as multi-channel retailers that sell though mail-order catalogues, physical stores, and, importantly, online.

“It’s only been in the past couple of years that (Myer and David Jones) have had an online presence at all,” she said.

“(US department stores Macy’s and Nordstrom) got into online retailing early and they’ve had almost perfect interface with consumers so all of there stock is available online.”

Ms Say said multi-channelling would still pay off.

“It will help bring traffic back into stores,” she said. “People will re-engage with the brand of David Jones.”

Myer and DJs both have strategies.

Dr Rosewarne said both stores could catch up but also would need to “offer something that online doesn’t, such as stylists and bra-fitting services. “Initially, you are best off getting fitted properly and I think that type of thing people would be willing to pay for,” she said.

Myer and DJs have personal shopping services. They also have both committed to increasing staff levels and placing a greater emphasis on customer service. Ms Say said this would serve them well.

“They need to deliver an exceptional in-store experience,” she said.

Mr Rochecouste said stores could do that by embracing “glocalism” which is about going global and local.

John Martin’s or “Johnnies” – which stocked international brands but also was the Pageant Store as host of what is now the Credit Union Christmas Pageant – was SA’s very own glocalism department store.

“Because of their timing and economic situation it was very sad,” Mr Rochecouste said of the 132-year-old department store’s closure in 1998.

“They understood it – they built community around them.”