David Jones marketing channel recommendations

Context & Problem Identification:

The introduction of savvy, global retailers such as H&M, Zara and Aldi to the Australian market has prompted heavy criticism of David Jones’ “bland” offerings, with many critics claiming that the established department stores are failing to adapt to modern consumer expectations. This did not necessarily indicate that their product offerings or target market were wrong, but that their method of delivery was failing to resonate. With this in mind, in 2014 David Jones sought to re-evaluate how it presented its products, and how to realign its presentation across various sales channels; particularly online (Mitchell, 2014).

This was not David Jones’ first examination of its online offerings; in fact in 2013 David Jones upgraded its online presence across the board in direct opposition to Myer (Fitzsimmons, 2013). This primarily involved an increase in social media presence, redesigned online stores, direct email marketing to consumers and a “click and collect” feature that leveraged the variety of physical locations available. All of this was under the banner of “omni-channel marketing” led by CEO Paul Zahra, who says “the consumer wants to shop anywhere, anytime” (Evans, 2016).

“Omni-channel” was used to refer to the utilisation of one core infrastructure to deliver a consistent experience across devices, consumers and channels to the customer. The “click and collect” initiative is highly evocative of this as it used existing brick-and-mortar infrastructure to provide a faster product to online shoppers via in-store pickups. As the products were already stocked in stores, it was simply a matter of establishing the infrastructure to process orders, but the pay-out for some consumers was huge.

There were two more major components in their online “omni-channel” focus; firstly they identified a problem within the consistency of the pricing of their products for consumers. While they were (generally) able to guarantee consistent pricing across their various channels, they found many consumers were put off by higher prices for international brands, when compared to international sites. David Jones then reached out to many of its brands and negotiated lower costs with 60% of its channel members to guarantee competitive pricing for consumers (Reilly, 2013). Whilst this had always been a problem, only increasing consumer awareness of international pricing and growing accessibility of the internal online market demanded a response from David Jones.

Lastly they spent around 80$ million (25% of their annual expenditure) (Fitzsimmons, 2013) to develop several online channels to work around their increased web-presence. Not only was their web store overhauled, but a mobile store and dedicated mobile apps were also introduced to further smooth their consumer experiences. This was bolstered in 2014 through a severe increase in online metrics (Chanthadavong, 2014) to further track its market, as well as direct feeds to utilise that information in store for foot traffic and correlate that with the huge amount of digital contacts amassed through social media. David Jones reported that its new online store had driven sales by 220%, with higher online traffic and conversion numbers, and despite “relatively small sales numbers” (Fitzsimmons, 2013) were making transactions up to three times higher value than in store (Chanthadavong, 2014). Paul Zahra said “we have successfully transformed David Jones into an omni-channel retailer, and we are aiming for our online sales to account for 10% of total sales by FY18.”

So with so much success behind them, what has happened to David Jones’ online offerings now? Since take-over by Woolworths in 2014 David Jones has made no notable progress in developing their online channels alongside other channels or independently (Thumm, 2016). Whilst sales figures have slowly increased the company has been accused of stagnating, recently looking toward major product and presentation changes in their traditional, physical stores to restore interest. Their online store is modern but uninspired and feels almost weighed-down by the omni-channel as there is no point of difference or major convenience offered. David Jones has also struggled with its merchandising system, creating problems during the launch of its own private label (McCauley, 2016). International sales still appear to be flagging, and talk still persists of creating “mobile engaged [&] enabled” platforms (McCauley, 2016) – a good indication that despite their recent revamped mobile sales platforms are not performing as well as hoped.


1.       Create a point of difference through online offerings, without devaluing or removing it from the omni-channel approach.

Dana McCauley writes that David Jones is “looking to improve its online shopping platform and leverage its customer database to create targeted offers” (McCauley, 2016) and this may be the best way to give consumers a reason to use these channels, as opposed to just the brand. This is important given the high operating costs of online channels (Fitzsimmons, 2013), but also highly feasible as much of the infrastructure needed already exists within stores and in David Jones’ online transaction system.

Email notifications are nothing new to the digital marketplace, so David Jones will need to leverage its wide product base and scale to provide guarantees to the consumer whilst anticipating their purchase needs. A sales database that catalogues shoppers’ habits, incentivises return visits, and offers personalised deals on their desired products creates a strong relationship between the consumer and retailer. David Jones also currently offers an extensive returns system and other offers to mitigate perceived risk to online shoppers not, but this is poorly published and needs to be made clear alongside promotions. 


Presently online shoppers spend roughly 3 times as much at David Jones as their in-store counterparts, there are just significantly fewer of them (Fitzsimmons, 2013). This is a clear indicator that the current presentation of products is significantly motivating, more so than in store likely due to upgrades performed over the last few years (Fiore, Jin, & Kim, 2005). As such this is a highly cost effective move to simply maximise sales conversion without having to make significant changes to the channel design, only a shift of focus.

Perhaps some examination of the online customer base would be required, particularly in the region of how to mitigate perceived customer risk (Hsin Chang & Wen Chen, 2008) as to ensure that the entire consumer base is equally comfortable using this channel.

2.       Reduce costs and condense online offerings to bring channel in line with sales data.

Given that despite consistent development the channel still only acts as the primary sales interface for few shoppers, the channel could be streamlined to still facilitate those customers but at costs in line with the provided profit. This would dramatically increase the sustainability of the channels, but may disincentivize some consumers, hopefully redirecting their purchase to stores. The most simplistic way to do this would be we removing any centralisation from the online system, and sourcing it out entirely to retail branches.

This would reduce total stock requirements, staffing, storage space and potentially even delivery costs as products would already be closer to consumers. It would further blur the line between channels and would allow all online funding to go towards development of the sales interface. To take this further, delivery could even be removed from the channel making the successful “click and collect” initiative the new standard, and completely removing a large portion of coordination and costs.


This is an enormously risky move for the same reasons we recommend the previous solution. Whilst presently online consumers make less than 10% of profit (Fitzsimmons, 2013), there is enormous room to grow due to larger sales size. Given this change of focus will not add to the customer experience in any way, except perhaps transit time, but will certainly increase the perceived risk and potentially lower convenience; it is somewhat closing the door on the possibility of online sales growing further.

This is especially impactful when considering the international market, as systems will need to be established to sustain that, but cannot be mitigated in quite the same way, third parties must be used which dramatically increases risks and increases the potential for channel conflict.

Given the clear potential to offer convenience, and convert sales at an incredible rate, we recommend following Suggestion 1, and look to develop more supplementary systems to provide your online channel with a point of difference. We believe that this can enhance the customer experience without detracting from the omni-channel focus, whilst predominantly leveraging existing innovations. The key focus will be minimising perceived customer risk, and ensuring that no products are ignored by not having an online option.


Chanthadavong, A. (2014, March 19). David Jones to target online users with more analytics. Retrieved September 30, 2016, from ZDNet, http://www.zdnet.com/article/david-jones-to-target-online-users-with-more-analytics/

Evans, S. (2016, September 26). Sharpen up strategy and Australian retail can win in Asia says ex-dJs boss. Retrieved September 30, 2016, from Financial Review, http://www.afr.com/business/retail/exdavid-jones-boss-says-australian-retailers-need-multiple-routes-to-market-20160925-gro9o3

Fitzsimmons, C. (2013, March 26). Getting ahead or catching up: Is DJs doing enough to meet its global competitors online? Retrieved September 30, 2016, from Financial Review, http://www.afr.com/business/getting-ahead-or-catching-up-is-djs-doing-enough-to-meet-its-global-competitors-online-20130326-jycg4

Thumm, J. (2016, May 26). David Jones management shakeup includes new digital role. Retrieved September 30, 2016, from Power Retail, http://www.powerretail.com.au/news/david-jones-new-digital-role/

McCauley, D. (2016, August 25). David Jones’ new owners are taking a punt on a dramatic new vision for the department store. Retrieved September 30, 2016, from news.com.au, http://www.news.com.au/finance/business/retail/david-jones-ambitious-100-million-plan-to-become-australias-top-food-destination/news-story/818b0069ed2d88c53a85226d33575b1a

Mitchell, S. (2014, April 1). Omni-channel retailers cashing in. Retrieved September 28, 2016, from Sydney Morning Herald, http://www.smh.com.au/business/retail/omnichannel-retailers-cashing-in-20140401-35vlf.html

IBISWorld. (2016, August ). IBISWorld Industry Report G4260. Retrieved September 30, 2016, from IBISWorld, http://clients1.ibisworld.com.au/reports/au/industry/default.aspx?entid=405

Fiore, A. M., Jin, H.-J., & Kim, J. (2005). For fun and profit: Hedonic value from image interactivity and responses toward an online store. Psychology and Marketing22(8), 669–694. doi:10.1002/mar.20079

Hsin Chang, H., & Wen Chen, S. (2008). The impact of online store environment cues on purchase intention. Online Information Review32(6), 818–841. doi:10.1108/14684520810923953