QUT retail expert Dr Gary Mortimer predicted the demise of traditional department stores in December 2012 saying, 'there may only be room for one full line traditional department store'.
Dr Mortimer said industry news today revealed Myer had indicated it wanted rival David Jones to reconsider a proposed merger between the two major department stores which was rejected in October last year.
He said the reappointment of Bernie Brookes as CEO of Myer had been viewed in the industry that he would be presented as a potential chief of a merged department store.
"If successful, a combined David Jones/Myer consortium would reduce operating costs by $85 million by removing duplication and closing stores. Together, the business would generate more than $5 billion annually in sales," Dr Mortimer said.
"The suggested merger is a cost reduction strategy, rather than a growth strategy. For the first time it is clear the department stores are 'waving the white flag' and looking to merge to survive."
Dr Mortimer said the fatal flaws that appear to have felled the retail giants were either their not seeing or failing to respond quickly enough to: vast changes in shopper behaviour, category killers, poor target marketing and the growth of online shopping.
"During 50s and 60s, a day out in the city to visit Mac & East, Grace Bros, David Jones, Walton's, was an event," he said.
"We consumers have changed radically. Instead, we want to select our own items, try them on ourselves, even scan and pack our own purchases.
"We want to shop from our lounge rooms, on the train, 24/7. The sprawl of suburbs and growth of shopping centres has stopped us coming into the city where the flagship department stores are located.
"Once you could buy everything from furniture and white goods to school shoes, electronics, and even automotive accessories (Myer had an auto department) at a big department store.
"Now we head to specialist monoliths like IKEA and A-Mart for furniture, Anaconda and Rebel for outdoor and sport products, Bunnings and Masters for home improvement and hardware, while JB Hi-Fi and Harvey Norman dominate the consumer electronics market.
"Myer is trying to be all things to all people selling Miss Shop tee-shirts at $24.95 and $299 designer blouses upstairs. It is up against newish entrants in the fashion sector that know their market and cater exclusively for it such as Zara and Topshop."
Dr Mortimer said offering clearance sales online might drive multi-channel purchases but could merely cannibalise in-store sales.
"Once shoppers camped outside all night to grab that elusive bargain; now department stores may find these same shoppers are camping out in their lounge chairs at home, waiting until mid-night for the sales to open.
"When we consider the fundamental shift in shopping behaviour, the challenge of new competitors and the growth of online shopping, we must seriously consider it is plausible, if not financially astute, to consider a Myer/DJ's consolidation."
Media contact: Niki Widdowson, 07 3138 2999 or n.widdowson@qut.edu.au
