Boosted self-care and home improvement sales trends may just act as a lifeline for Australian department store chains Myer and David Jones as Australian‘s stuck at home look to online shopping to provide a sense of normalcy in the current COVID world.
The coronavirus crises has caused huge impacts to the retail sector, causing store closure across the world, both plummeting and skyrocketing sales in different retail industries, and forcing the industry to digitise faster than ever before to retain any customer base. Like many other industries, retail has found innovative ways to meet and even exceed customer needs.
Similar to the many of the effects of Coronavirus which have not hit as hard in Australia, our retail sector is similarly not being hit as hard as others around the world despite massive layoffs in retail around the country. Retail sales across the sector actually saw growth on last year during February, with sales increasing 0.5% according to the Australian Bureau of Statistics. This rise was largely a result of consumers stockpiling groceries and pharmaceuticals, with other sectors of retail such as fashion seeing decreased sales*. Despite this many retail workers have found themselves out of work as physical distancing laws force many shopfronts to close down until the coronavirus crisis plays out.
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Nation-wide, department stores also managed to increase sales during February, with a 3.1% increase on last year’s sales. Following the implementation of stricter physical distancing rules brought into play throughout March, Myer and David Jones, arguably two of Australia’s largest department store chains, have both managed to effectively utilise online platforms and a strengthened digital presence to retain sales and customer relationships, even while customers were unable to access their brick-and-mortar stores.
At the end of March department store Myer was forced to let go 10,000 staff due to coronavirus retail store closures which will remain in effect until at least May 11. At the time, the retailer made the decision to temporarily close down all Myer stores, with staff being stood down without pay during the closure.
However the news isn’t entirely negative, with the retailer being able to use its already strong digital shopping platform to continue to service its customer base. Myer announced an 80% increase in online sales over the Easter long weekend alone, and is anticipating another sales surge coming up to Mother’s Day. According to Myer Chief Customer Officer Geoff Ikin, self-care and home improvement were big winners for the weekend, with beauty sales rising 7000% on the Easter Saturday, intimate apparel sales up 600%, home and entertainment sales up 300%, children’s wear up 160% and up around 140%.
By April 20 Myer further announced that were able to rehire 2,000 of its staff to keep up with online shopping demand. The company has reduced their free delivery threshold to $49 and introduced relaxed returns policies to help customers adjust to an online-shopping mode.
“Online fulfillment is now occurring at 26 locations across the store and distribution centre network,” Myer said.
“Pleasingly, this has resulted in approximately 20% of team members being asked to return to work to support online fulfilment.”
The company has also been able to relaunch their click-and-collect services across 22 retail stores in a bid to help customers avoid shipping delays before Mother’s Day. Select stores will house pop-up booths at entrances with enhanced hygiene and distancing measures to help customers collect their purchases. The reinstatement of a click-and-collect service is hoped to allow Myer to reinstate further employees.
Myer’s share price has also managed to rise back to $0.19, well above their low in March of $0.083 but far from their 52-week high of $0.72.
In early May David Jones’ parent company Woolworths Holdings announced annual earnings were down 20% on last year. Similarly to Myer, David Jones has also reported large sales spikes in online retail, with sales more than doubling during March. Online sales accounted for over 20% of sales for the month of February, a 108% increase but despite the increase in online sales the company still reported an overall 19% decrease on sales compared the same period in FY19.
Woolworth Holdings said that stores that relied more on a higher proportion of tourist trade had been hit the hardest, which saw smaller format stores such as Barangaroo and James Street close down. It was announced at the end of March that David Jones’ small format stores affiliate retail Group, the Country Road Group, including Country Road, Mimco, Trenery and Politix, would close down as the group reported a 60% sales decrease during the last two weeks of March, and a 32.2% sales decrease across the entire month. The store closures leave 5,000 workers out of jobs until storefronts reopen.
Across it’s Australian, New Zealand and South African operations, Woolworths Holdings is expected to report a 20% loss in earnings for FY20, with the board, group CEO and senior executive team all forgoing 30% of fees and salaries for three months in response. The company has also announced plans to speak to landlords to discuss alternative arrangements to lease commitments for stores.
Woolworths Holdings has given some insight into the initial impact of the national emergency declared with the discovery of South Africa’s first COVID-19 case on 5 March 2020. Read more here. https://t.co/jvPw4WVv3Q pic.twitter.com/3g17aKGbB9— Zoowun Retail Insights (@Zoowun) April 7, 2020
Unlike Myer, however, David Jones’ move to an online platform has not been a smooth one, and the company has received backlash over failure to respond to customer complaints and undelivered items. More than 70% of reviews of the department store on productreview.com.au gave it the lowest available score over shipping and customer service complaints, with many customers agitated over being sent incorrect items and being unable to reach a company representative to discuss the issue.
Although both department store chains have managed to retain a customer base thanks to their digital platforms, economists have warned that rising retail sales earlier in the year should not be considered the start of a longer-term trend, with the end of stockpile shopping likely marking a downturn in national spending.
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Words by Danielle Austin
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