What’s next for David Jones?
The timing could not have been worse. Thomas had recently launched a $400 million redevelopment of David Jones’ Elizabeth Street flagship, the first step in the retailer’s turnaround plan to become a world-class shopping destination.
Like many department stores around the world, David Jones has struggled to grow sales in recent years. It recently reported a disappointing Christmas. And any progress that was on the horizon has likely been disrupted.
Ian Moir, CEO of David Jones’ parent company Woolworths Holdings Limited, will steer the ship in the short term. A spokesperson for the retailer said a replacement will be announced in due course.
No further details have been shared about Thomas’s departure, but the company has confirmed he faced a discrimination complaint last November. An immediate external investigation found no evidence to support the claim, according to the spokesperson.
But the question remains. Without Thomas at the head of its turnaround effort, what is the next step for David Jones?
Taking the time to get it right
According to Swinburne University associate professor of marketing Sean Sands, the business should take some time to get itself back on a strategically-planned course with direction from the head down.
“Department stores generally are struggling,” Professor Sands told IRW, noting that this issue extends beyond just Australian shores to overseas department stores such as Debenhams and Sears.
“I think one of the issues they are having is: what is their identity, and who are the customers they are serving? They’re trying to be all things to all people, and that’s obviously not working.”
David Jones reported depressed sales over the key holiday period, alongside many other retailers, as Australian consumers continued to tighten their spending in response to stagnant wage growth and the increased cost of living.
Sands noted that, in this climate, department stores such as David Jones, Myer, or discount counterparts Kmart and Target, need to be more clear about what they are and what they offer.
In this sense, David Jones’ strategy to bring in more exclusive international branded products to its stores is a sound one, said Sands, in that it fosters an identity for itself and its customers, and gives customers a reason to shop there – something he said Myer has failed to do for the past ten years or so.
“Whether or not people want to pay is another question,” Sands said.
“Obviously there have been soft retail sales, and with house prices there has been a softening of consumer sentiment. But this doesn’t mean [David Jones] can’t have unique brands that are varied across premiums and more mainstream, I think they can diversify their brand offering but still be unique.”
Who is next?
One potential spanner in the works is the fact that, in the short-term, Woolworths Holdings Limited put forward group chief executive Ian Moir to fill the leadership void.
WHS purchased David Jones in 2014 for approximately $2.1 billion, and has since seen the value of its investment fall dramatically as the landscape for department stores continued to dwindle.
“I think there will be some degree of [Moir] wanting to maintain the corporate structure that’s been put forward, and there will be some degree of wanting to stamp his own individual future or path [for] the business as well,” Sands said.
“I think we’re going to have to wait and see how that plays out over the next six to 12 months.”