David Jones looks to stop the rot online

David Jones' chief Paul Zahra has laid out a strategy that will see the retailer boast tens of thousands of online products on its mobile, online and Facebook stores by next year, in a bid to reverse the company's fortunes.
Written by Luke Hopewell, Contributor

David Jones' chief Paul Zahra has laid out a strategy that will see the retailer boast tens of thousands of online products on its mobile, online and Facebook stores by next year, in a bid to reverse the company's fortunes.

David Jones reported lower than expected first-half profit numbers yesterday, reporting a net profit after tax figure of $85 million for the six-month period ending 28 January 2012. This figure represents a 20 per cent slide in profits from the previous corresponding period of $105.7 million in the first half of 2011.

Zahra yesterday acknowledged that the retailer is facing some of the most challenging retail conditions in the last half century, and laid out the company's plans for getting back on track as a revamped, "omni-channel retailer".

"The primary focus of the company is to lay the foundation for future growth and development as an [omni-channel retailer] by implementing the system's platforms, organisation structure and processes required to support the company's transformation," David Jones wrote in its strategy documents posted on the Australian Securities Exchange (ASX) yesterday.

David Jones added that it has less than 12 months to install critical new systems to improve multi-channel retailing in time for the busy Christmas retail rush.

"The new systems, to be implemented by Christmas 2012, will include the new IT system provided by IBM, including a new web store, content management system, order management system and warehouse management system."

David Jones announced in February that it had teamed up with IBM to help drive its new omni-channel retail strategy.

Other new systems coming to David Jones include a point-of-sale system, a single omni-channel retail management system, traffic analysis system, workforce-management software, merchandise planning tools and a system that will allow for the automation of rebate collection and mark-down calculations.

The company will add 200 new staff solely to manage the new IT initiatives across the business. The new staff members are slated to work within the company's retail services division.

The retailer will lean on new technology and new staff to launch customer-facing retail initiatives, including a web store boasting 90,000 products. David Jones says it is looking to international retail giants like Macy's and Nordstrom for the way forward online.

"In 1Q13, a new web store will be launched, featuring approximately 90,000 [stock-keeping units (SKUs)]. This compares favourably to Macy's, which has 50,000 SKUs online, and Nordstrom's, which has 138,000 SKUs online.

"A further extension of the web store will be rolled out in 2Q13, with enhanced functionality such as customer reviews and ratings, additional carrier options and additional payment plans. This will ensure that David Jones' online offer is competitive from both a local and international perspective," the company wrote.

David Jones will also release a mobile-optimised version of its web store to run natively on smartphone platforms, which is aimed at stopping customers from window shopping in David Jones before buying an equivalent product online from another vendor.

David Jones will also roll out a store on its Facebook page in a "social commerce" push.

"Customers will be able to browse, purchase and organise delivery, all within the social commerce channel via the company Facebook platform," it said.

These innovations will also offer customers a transparent view of David Jones' stock levels, allowing a mobile app user to log on and check whether a particular store has stock near them if they don't want to wait for items to be delivered. David Jones says that it will also be helpful for customers looking to check whether a particular store has a big ticket item — like televisions or whitegoods — in stock before they trek out to the store.

David Jones is also awaiting the results of a taskforce set up by the Productivity Commission to investigate cost-effective ways to lower the sub-$1000 GST threshold for international purchases, which it admitted last year is too high.

David Jones shares closed 10.99 per cent lower yesterday after the poor results announcement, and they continue to slide today.

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