David Jones on Lambton Quay in Wellington. Photo/Mark Mitchell.
David Jones on Lambton Quay in Wellington. Photo/Mark Mitchell.
Myer and David Jones are honestly trying. So it's sad to see what is happening.
Myer got itself a confident young chief executive who put in a bold new strategy. But he couldn't stop the department store from bleeding.
Myer, which has posted a run of bad sales figures, just this week announced it was cutting yet more staff to turn the business around.
David Jones got sold off to foreign owners who are also trying a new strategy. It's a different strategy to the Myer one, with more focus on food.
But they are bleeding too. This week the owner of David Jones announced they were looking into writing down the value of the company they bought for A$2 billion in 2014.
The synchronised horror in the department stores suggests maybe there's nothing they can do.
Maybe it's all over. Maybe department stores are like big bookstore chains or video stores that simply don't have a future, no matter how you try to shake it up.
This next chart shows the share price of Myer ever since it split off from Coles in 2010. It is a picture of relentless negativity.
Christmas is supposed to be the happiest time of year for retailers, but four days before Christmas 2017, Myer's share price hit a record low.
Department Store Myer's share price continues to decline. Source/supplied
If you want to go beyond Myer and David Jones to look at the department store sector as a whole, the Australian Bureau of Statistics can help you out.
They keep detailed monthly numbers on how much has been sold through department stores.
It paints a disturbing picture. Sales stopped growing in 2009 and have been stagnant over the last eight years, though the population of the country has risen by three million people in that time.
Australian department store sales over the years. Source/Australian Bureau of Statistics
How long have department stores got? More than a year, obviously. You will still be able to go to Myer for the Boxing Day sales next year. But what about in five years or 10 years?
And what happens to our city centres and our shopping malls if they don't have these big anchor tenants to draw people in?
Is there any reason to hope? If there is a light on Australia's retail horizon it is Kmart.
The Wesfarmers-owned discount retailer sold A$1.36 billion worth of stuff in the first quarter of financial 2018, nearly twice as much as Myer's A$700 million of sales.
Kmart is killing it and proving that in certain circumstances, people don't mind a bricks and mortar department store. They just want it to be really, really really cheap.
At Kmart's online store men's shirts range from A$4.25 to A$20 while at Myer's online store, they range from A$12 to A$139.
Kmart provides a hint of a whisper that maybe department stores aren't like video stores. Maybe the problem is not the concept, but the market positioning.
Myer and David Jones have always been positioned as a bit up-market. They're chic and genteel, not cheap and cheerful.
Shoppers walking outside Myer in Melbourne. Photo/123RF
So, imagine the economy turns the corner again and instead of feeling poor we feel rich. What might happen then?
Instead of boasting about getting a bargain at Aldi, we might want to boast about getting quality at David Jones Food Hall. Instead of wearing a four dollar Kmart tee, we might feel good about a $130 Lacoste Polo.
RICH MAN, POOR MAN To be fair, the kind of economic upturn that propels us all back in the direction of premium retail seems unlikely.
Myer doesn't seem to be betting on one happening, either. Instead it is shifting slightly in the direction of Kmart, opening "clearance floors" that sell Myer products at cheap prices.
This has raised the ire of one of Myer's biggest shareholders, Solomon Lew.
The veteran retailer and Premier Investments chairman, thinks they cheapen the brand. He's not wrong about that. But department stores need to try new things. Standing still is getting them killed.
