David Jones is struggling as customers are flocking to cheaper options such as Cotton On and K-Mart.
The Australian department store giant reported that their total sales decreased by 0.9 per cent over the last financial year.
Analysts believe that the decline is partly due to bargain hunting, where customers are seeking out cheaper options to purchase clothing and homeware items.
David Jones is struggling as customers are flocking to cheaper options such as Cotton On and K-Mart
Analysts believe that the decline is partly due to bargain hunting, where customers are seeking out cheaper options
Senior Industry Analyst from IBISWorld, Kim Do, said that the results aren’t surprising as many of the mid to up-market department stores have been seeing poor results.
‘Both David Jones and Myers have failed to retain consumer expenditure amid rising competition from online-only retailers, fast fashion retailers and largely negative consumer sentiment over the period,’ Ms Do said.
Lower-end department store, K-Mart, has boomed ever since they put their focus on affordable homewares, and has seen year-on-year growth over the past five years.
‘Kmart dominates the cheap homeware market, as consumers increasingly prefer inexpensive fashionable homeware items over premium-priced varieties,’ she said.
Ms Do also said that Big W has also tried to focus on this market by launching their own collection of affordable homewares.
While these smaller department stores are booming, David Jones’ fashion department is also taking a hit as competition from fast fashion retailers, such as Cotton On and Zara, is becoming more intense.
Fast fashion retailers have the advantage of selling clothes at a lower prices, while still offering their customers the latest styles.
David Jones’ profits were halved to $63 million over the last financial year, and they’re trying to build this back up by offering exclusive partnerships.
Lower-end department store, K-Mart, has boomed ever since they put their focus on affordable homewares, and has seen year-on-year growth over the past five years
On Thursday, it was announced that the Country Road Fashion Group would be leaving Myer completely to exclusively sell their products in David Jones – a move that could help the department giant rise again.
Ms Do says that despite the trend of bargain hunting rising, the luxury high-end market isn’t diminishing.
‘This trend is known as market polarisation, whereby consumers purchase the majority of their clothes and accessories from the fast fashion segment and then complement this with pieces from the luxury high-end market,’ she said.
While David Jones has positioned itself as an up-market department store, the influx of international luxury brands in the Australian market poses a threat.
‘Consumers have opted to purchase their luxury goods directly from these brands, rather than through the department store,’ Ms Do said.
David Jones’ fashion department is also taking a hit as competition from fast fashion retailers, such as Cotton On and Zara