As two of Australia’s stalwart brands in Myer and David Jones continue their respective journeys through troubled waters, it heralds yet another sign of the shifting business environment and shift towards an experience economy.
For Myer and DJs, in-store retail experience needs to be seamless. It should feel like a day at the theme park, amplifying the joy of shopping for those who love it and making it much more tolerable for those who hate it.
However, with falling sales figures and somewhat of an identity crisis for the country’s two biggest department stores, let’s take a deep dive into how focusing on designing the customer journey may be the path forward for these giants of Aussie retail.
‘Cyborgs’ are a breed of business that are neither entirely digital or entire physical, but tread the line between the two environments to deliver the best possible customer experience. How then, can digital be used to optimise the operational efficiency of Myer and DJs while enabling the delivery of a killer customer experience?
As Myer, Australia's largest department store, downsizes, focusing on a more intimate customer experience, it is arguably out-David-Jones-ing David Jones.
Myer is applying a much more David-Jones-esque approach to excellence in customer service and a focus on experiences, but doing it at an intimate level. It’s almost a metamorphosis of the retail journey.
With that said, Myer still has a way to go. Stocktake sales, daily deals, clearances and click frenzies have commoditised the offering and devalued the experience. Sales are like sugar; a little bit is OK, but too much is unsustainable.
Then there’s MYER one, widely recognised as one of the most successful loyalty programs in the nation with over 5 million cards in circulation. However, while recognising and rewarding loyalty is important, you can't lead with it.
A business must nail elements of the customer experience before playing in the rewards game, or the program may run the risk of being seen as a distraction to the core offering. There needs to be a focus on future growth, as sales-only strategies are almost always going to show diminishing returns.
The reality is, David Jones appears to be without a clear direction, leaving us unsure as to how the retailer can continue on this trajectory and find success. The company is allegedly reviewing its $25 million media account, but appears to be doing that as a cost-saving measure, rather than a way of pursuing new strategic horizons.
The David Jones brand used to focused on premium customer service, and was renowned for its approach to customer excellence. But somewhere along the way, the DJs version of what excellence means has been lost in translation as consumers didn’t actually want to be treated like Jay Gatsby or Hyacinth Bucket.
David Jones was far too quick to allow price matching against competitors better structured for price, such as JB HiFi or Chemist Warehouse, in the hope of upselling to exclusive brands.
The exclusive brands within the same portfolio, however, became non-exclusive as pressure to move to direct to consumer became impossible to withstand.
DJs is being beaten by the luxury brands in Hermes and Louis Vuitton in-store, and is now being beaten by its less-prestigious competitors, too.
In terms of an amazing experience, we're yet to see either store nail the combination of digital with face-to-face intimacy. This is where focusing on an intimate customer experience could be enhanced by digital.
With both brands still generating a considerable amount of revenue from their flagship Sydney and Melbourne stores, it's clear the race for mass-distribution is won online. Digital brands like ASOS and The Iconic have become much more competitive on the quantity and distribution value propositions that department stores previously had a stronghold over. These online retailers are technically department stores, just without the physical face-to-face experience.
Digital department stores have made a significant impact on the Myer model with direct-to-consumer offerings also encroaching on the concession model. Myer was unable to capitalise on its own online experience and is shifting focus back to the offline experience, having to reinvent as a ‘traditional’ department store.
A prime example of this is the MECCA integration within Myer, opting for a much more personalised and intimate journey. Myer seems to be missing a digital backbone to its arsenal expected by customers.
DJs has the bare minimum when it comes to its digital experience, but continues to lose to competitors in The Iconic and ASOS. Yes, you can buy from DJs online but there is no reason why you would with price, interface, shipping, personalisation and variety all offered in better format by competitors.
David Jones could instead offer luxury delivery, sourcing inspiration from the likes of China's ecommerce platform JD.com, known for offering a luxury delivery experience, complete with white glove service.
Read more: David Jones aiming to be Australia's premier retail destination
Within the next five years, we'll see a new breed of department store. Maybe it will be The Iconic creating a physical store? Or perhaps physical storefronts will be purposed as styling showrooms visited once or twice per year, with the customer's personal shopper sending suitable recommendations throughout the year?
The reality is businesses need to become cyborgs in their offerings; part-human, part digital. They can't survive as a traditional retail model, and only a few will survive the race to digital domination.
That being said, when it comes to the traditional department store model, we still crave personal experience and someone to tell us that we look good in that suit or dress. We crave the human interaction and the ability to touch and feel things, but we also crave the convenience and ability to order online in our own time with packages arriving at our home or work.
There is a balance, and department stores need to find it.
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