Traditional Australian department store giants are struggling to adapt to the changing retail landscape, with David Jones announcing the end of his experimental partnership with BP.
David Jones revealed on Friday that he was doing well in his foray into high-end gas station food that began in 2019 following a “strategic review.”
There are currently 35 dual-brand David Jones-BP convenience stores in Sydney and Melbourne that will return to BP-only gas stations in the coming months, the companies said.
DJs will focus their food efforts “exclusively on bespoke dining experiences at our Elizabeth Street and Bondi Junction locations, as well as premium pantries and seasonal gift lines in store and online, ”said a spokesperson for David Jones.
“David Jones remains committed to providing an exceptional food line that reflects the needs and preferences of our customers while reducing costs and improving overall business performance,” they said.
A BP spokesperson confirmed the changes, saying that “our organizations have collectively agreed to work on a managed transition that will see our relationship come to an end in the months to come.”
“We know the needs of consumers are changing and we are excited about the growth opportunity this represents for BP in Australia,” the spokesperson said.
“A differentiated, well-delivered offering clearly resonates with our customers, who lead busy lives and want easy access to healthy and delicious food, alongside other high-quality products and BP fuel offerings.”
Gary Mortimer, a Queensland University of Technology professor of marketing and consumer behavior, said if it was a “smart move” for DJs to try and target “the high-end consumer to looking for a better food and grocery experience ”with convenience offerings at BP outlets, in the end, the partnership did not match.
“When you walk into David Jones’ store in Bondi Junction, you come across a wider range and highly trained food specialists. It’s really the experience that you probably don’t get the same experience at a gas station, ”explained Professor Mortimer.
“So I think it was an issue with the shopping experience.
“If you live in Mosman you probably aren’t stopping by the gas station for dinner tonight, you are probably shopping at a different kind of store.”
Department stores fighting for their future
The end of the BP trial comes as David Jones and his competitor Myer desperately try to carve out a niche for themselves and adapt to changing buyer habits.
“If we look at the two department stores, Myer and David Jones, they’ve been struggling in the market for several years now. It’s just because the market has changed, ”said Professor Mortimer.
“These once great retail strongholds were where we went to buy everything from school shoes and furniture to consumer electronics and sporting goods.”
Instead of shopping at department stores, consumers now have a plethora of options ranging from online stores to ‘category killer’ retailers that dominate specific industries.
“Sadly, today the ‘category killers’ that evolved in the ’80s and’ 90s are now where we go to buy sports equipment, furniture and bedding,” Professor Mortimer said.
Many of the key brands that department stores were selling “now have their own flagship stores and stores,” he said.
“So you end up in a situation where, at the end of the day, the market and consumers have moved to other distribution points.”
The DJs and Myer are now looking to ‘resize’ their stables by closing smaller stores and shutting down floors to help stem the losses.
So what does the future hold for us?
“There is probably still a market for at least one major department store brand in Australia,” Professor Mortimer said.
“Perhaps a hot spot in Melbourne, Sydney, probably to a lesser extent Brisbane and Adelaide.”
Myer and the DJs will have to transform into premium destinations like Galeries Lafayette in Paris or Harrods in London to survive, Professor Mortimer said.
“A store that has maybe four or five levels, with champagne and oyster bars. A food offer, but a tailor-made food offer. Exclusive premium brands. This is, I think, the future of department stores, that they ultimately become destination retailers, ”he said.
“Because at the moment there probably isn’t much of a future in a suburban department store.”