a remarkable 6.4 per cent lift in sales for the latest financial year. Like for like sales were 3.7 per cent and David Jones actually posted double digit growth in the second half, a result that has been well beyond the hopes of the two department store chains for many years. Woolworths took control of David Jones in mid-2014, giving its new management team of Ian Moir and Iain Nairn a head start on Myer’s new CEO, Richard Umbers. But if you had to choose right now which retailer you would prefer to command, it would have to be David Jones for today and for the future. David Jones and Myer are both pursuing similar strategies in several areas, but the reality is that Woolworths bought a business that was in much better shape than Myer and is more likely to get traction for its efforts. David Jones has a more contemporary store network and a better brand positioning, as well as a more seasoned management team led by two experienced and successful retailers in Moir and Nairn. With limited shopfloor retail experience and just over nine months at Myer, Umbers faces a much more herculean task to reinvigorate Myer. And his challenge is not just to make tough decisions, but the right decisions, to get the balance right. Umbers has cut staff numbers in the Myer head office and is now attempting to reconfigure staffing in stores, moving from a heavier permanent staff profile to a more flexible mix of less permanent staffers and more casuals. Umbers has also opted to cut the number of brands stocked in Myer stores and is still casting a critical eye over the store network with a view to exiting under-performing locations. Property play David Jones does not have the same issues with its store network that Myer has and is now set to realise a notable windfall from the sale of the freeholds of its Sydney and Melbourne flagship stores. Woolworths Holdings acquired property worth around $600 million with the David Jones acquisition and the sale of the two central business district stores is expected to tip at least $400 million into the retailer’s coffers. David Jones would leaseback the stores while re-investing a large slice of the proceeds of the sales into store upgrades, possible new stores, merchandise and customer services, as well as an enhanced food offer. The property sales were expected from the outset when Woolworths took over the retailer, but the move to sell now follows a comprehensive review by Nairn of the productivity of David Jones’ floorspace and the opportunities for stronger growth in sales and earnings. It is understood that David Jones is planning terminate the Dick Smith electrical concession, which is currently operating in 29 of the chain’s 38 stores under a three-year deal that runs to October 2016. Brand shake-up Woolworths does not sell electrical goods in its African stores and is keen to create more floorspace in flagship stores for an upgraded food offer that would generate more foot traffic and create more space in other stores for expanded fashion and homeware ranges. David Jones has cut around 180 brands from a total of around 2400 to create space for its Country Road, Trenery, Witchery and Mimco brands, as well as private label ranges it sells in its stores overseas. Myer has cut around 100 labels and cut into its private label brands in a bid to improve sales and has embarked on a clearance sale across its 67 stores after taking down the mid-year stocktake sale signs. The culling of under-performing brands is nothing new in department stores, but the decisions of both David Jones and Myer on merchandise ranges marks an end to five years of one upmanship and brand poaching from one another. The cull is part of a clear strategy at David Jones, where new private labels are being introduced as part of a plan to create a distinct point of difference to Myer and other retailers. For Myer, the story is different. Myer has an over-reliance on concessions, brands that also have stores in the shopping malls right outside the department store. Where is the point of difference? Myer appears more adept at sub-leasing its floorspace than at retailing. While vigorously recruiting new brands over a number of years that could have provided a point of difference, Myer did little to support those brands, right down to having too few staff on the shopfloor to actually introduce and sell the ranges to customers. While David Jones appears to be working towards a unique selling proposition, defining a contemporary department store, Myer lacks a clear brand positioning and is losing relevance and market share. Myer’s new future? Myer relies too heavily on sales to its MYER One loyalty program customers.  Despite opening a string of new stores and upgrades to existing stores, Myer is failing to build its customer franchise, a fact evident in its most recent sales growth of just 1.7 per cent compared to David Jones’ 6.4 per cent. Woolworths is keen to invest more capital in the David Jones business and has factored in a positive return on investment, expecting profits to increase by between $130 million and $170 million in the next five years. Umbers knows that the Myer chain also needs more capital injections, despite the poor financial return achieved from the new stores and refurbishments. Umbers’ capacity to invest in the business is hampered by an under-performing store network, with financial analysts believing that Myer should exit up to 20 of the current 67 stores to rein in costs and to improve productivity from floorspace. Staffing levels and flexibility come into that store numbers equation, and that is an area that Umbers is currently addressing with a voluntary redundancy program and a proposed change in rosters that would attempt to put more staff on the shopfloor when customers are actually shopping. For Umbers, the number and location of stores, staffing levels and changes to merchandise ranges are all a delicate balancing act. Umbers believes part of the solution to the Myer malaise is the online space, and he is trailing a hub in the Westfield Parramatta store with digital media walls, online order collection, web browsing with free Wi-Fi, as well as gift wrapping, gift registry purchases and appointments for services, including style advice. If the trial is successful, Myer will roll out the hub concept into other stores. Umbers is keen to develop further Myer’s online presence, one of the areas of the department store’s business that has been achieving solid and consistent growth. However, the opportunities online for Myer, as it is with its stores, will largely be determined by the retailer’s ability to establish a point of difference to competitors – something new, something exclusive, something with added benefits not available from other retailers or cheap prices.