Dick Smith collapse continues to hit David Jones’ sales

David Jones

Sales at David Jones took a hit in the lead up to Christmas due to the collapse of electronics retailer Dick Smith and the timing of Boxing Day, according to a trading update from its South African parent company.

In its latest financial results, Woolworths Holdings said that in the 26 weeks to December 25, 2016, the termination of the Dick Smith electronics concessions in David Jones stores negatively affected overall sales by 1.6%.

Because Boxing Day fell on a Monday, sales from the post-Christmas rush will be included in the next six monthly trading update. Woolworths says the overall final sales number for this period is 2.7% lower than it would have been if Boxing Day trade had been included in this sales period

If those two “one off” events are removed, Woolworths says sales are 4% higher compared with this time last year. However, in the 19 weeks up to November 6 of last year, Woolworths reported comparable store sales at David Jones were up 0.6%.

It was less pleasant news for Woolworths-owned Country Road, with sales down 0.9% on the previous year. This is the second recent trading update showing declining sales at the clothing retailer, with Woolworths saying that in the 19 weeks to November 9, 2016, Country Road sales were down 2.8%.

In November 2016, both Country Road and David Jones outlined comprehensive strategic plans for the next 12 months.

For David Jones, a big part of this came down to further developing its food hall offerings, which it will aim to differentiate from the big supermarkets on the basis of “food authority” and freshness.

Meanwhile, Country Road outlined the goal of online sales hitting 20%, while re-establishing an “emotional connection” with customers.

Read more: David Jones takes on Myer in fancy food stakes as it looks to exploit “rush to the bottom” among grocery giants

International competition makes brand position vital 

Retail experts tell SmartCompany both David Jones and Country Road are facing the challenge of finding a new brand position at a time when the shopping alternatives are either much higher or lower end.

“I just think that Country Road and David Jones are very unique brands with a history and a positioning in the consumer’s mind,” says LZR partners’ David Gordon, who has recently seen the bricks-and-mortar offerings of both brands in South Africa.

“Quite possibly they appeal to an older demographic where the marketing and the positioning hasn’t really been reinforced or strengthened in the last two years,” he adds.

While David Jones has spent time upping its product offering, including a focus on curating a higher-end food offering for its stores, Gordon believes in the longer term there should be a move to a customer-centric approach.

“At the moment it just seems like they’re fitting what they’ve got into their strategy. Instead of understanding what they can do with their product, [they should] start looking and what they can do for their customer,” he says.

Retail strategist at RetailOasis Pippa Kulmar says that when it comes to Country Road, the challenge is finding a solid creative direction for a company that has traditionally looked to overseas trends for its designs.

“They have international competition—and it’s a market that’s always changing,” Kulmar says.

As a result, shoppers now have similar options across a range of price points, and “they’re either spending up or they’re spending down”, Kulmar says.

This is a challenge for several Australian brands sitting in the middle of the market, and the task for these retailers is to provide something overseas brands cannot.

“I would think like you need to find a point of difference,” Kulmar says.

David Jones was unable to provide SmartCompany with further comment on the trading update.

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Peter Morgan
Peter Morgan
4 years ago

Here’s an idea. Carry more stock in the most popular sizes. That would be a differentiator.