David Jones drops prices by up to 50%: Who was responsible for the higher prices before?

Retail giant David Jones announced new lower everyday prices yesterday and it denies its margins have been inflated, claiming the reduced prices are the result of “continuing negotiation” with international brands.

The department store’s “Lower Everyday Prices” program has secured price reductions of up to 50% across hundreds of products in categories such as fashion, beauty, accessories, shoes, homewares and electronics.

David Jones said the reductions are not temporary savings but ongoing, lower everyday prices.

The lower prices follow the announcement in March this year that David Jones had commenced a global “cost price harmonisation” program with its international brand partners, to address the price differentials that exist in the Australian retail sector when compared to international department stores.

Sacha Laing, group executive of marketing at David Jones, told SmartCompany since negotiations commenced early this year many of the department store’s brand partners have been able to reduce prices by addressing issues such as improving their distribution channels.

“Consumers have the ability to compare prices around the world and similarly for us as retailers it has also meant that we have a greater level of transparency to cost prices globally as well,” Laing says.

“A lot of our conversation with suppliers has been about why are Australia’s cost prices so much more expensive in the other market for the same product.”

Laing says this has given David Jones’ suppliers the “opportunity” to go back to their parent companies and ask the same question.

When asked why David Jones had not negotiated to reduce its prices earlier, Laing said it was “a good question”.

“It has not been as prevalent before, as online has become a more prevalent channel and you get the international exposure to the market it has highlighted these inefficiencies,” he says.

“In the past, when a product was sold at a lower price in the United States, that was not necessarily transparent to us or to the consumer”.

Laing says while consumers may have been aware of lower prices overseas, these products were not accessible to them.

“Previously, if products were available in a market at a lower retail price they were not available to the consumer. But now with the advent of global online shopping we are now operating in a global market,” he says.

“In the past, department stores have been subject to false accusations of inflated margins but that is not the case and Australian retailers operate on similar margins to those in other markets.”

Laing predicts the lower prices will lead consumers who may have bought mid-tier brands to “trade up” to Australian and international brands as a consequence of prices coming down.

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