David Jones to target online users with more analytics

David Jones said its future strategic direction plan has started to gain momentum, reporting a 220 percent growth in online sales for the first half of the 2014 financial year.
Written by Aimee Chanthadavong, Contributor

David Jones has reported that the launch of its new webstore — where online sales grew by 150 percent during the second quarter of the 2014 financial year — boosted the company's total online sales growth for the first half year ended January 25, 2014.

The department store giant said its online sales — where transaction value continues to be three times the size of in-store transactions — for 1H14 were up 220 percent on the corresponding period in the prior year. Online traffic increased by 75 percent during the period and its online conversion rate increased by 50 percent in 2Q14 compared to 2Q13.

Overall, the company's total sales for 1H14 was AU$1,042 million, up 3.8 percent from the reported AU$1,003 million that was achieved during the previous corresponding year. On a like-for-like basis, total sales were up 1.1 percent.

David Jones CEO and managing director Paul Zahra said the company's future strategic direction plan is starting to gain momentum, and is delivering results, with the company posting a profit after tax of AU$70.1 million for the 1H14, down from the previous year's AU$73.5 million.

"Our result reflects the momentum that our future strategic direction plan is gaining, with our core department store business delivering 8.3 percent EBIT growth. Our result this half also reflects the fact that the EBIT contribution from our financial services business broadly halved in line with previous guidance," he said.

Zahra also said the online sales growth during 1H14 was helped by the launch of new services — such as gift registry online, and click & collect — and now accounts for 9 percent of all online sales.

Also driving online sales was new functionality, such as shoppable videos, image zoom, and ratings and reviews, and an improved online user experience; the expansion of its online range to up to 120,000 SKUs available since December 2013; and being able to dispatch 98 percent of orders within 24 hours during peaking traffic periods, 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 percent of total sales by FY18," he said.

The company said it expects to continue the momentum online during the 2H14 by adding even more new functionalities, such as "shop with points" for all American Express cardholders, including David Jones American Express; improving website design for easier navigation; and expanding its online range with the rollout of new brands, concession brands, and "big ticket" merchandise.

Zahra also noted that a key component of the company's omni-channel retailing strategy going forward will be increasing its digital contacts and the rollout of its customer data analytics program in order to deliver a more personalised and cost-effective marketing strategy for individual customers.

Currently, David Jones said it has approximately 1 million digital contacts and is on track to increasing that to 2 million by FY15. This includes 670,000 email address, 265,000 Facebook fans, 55,000 Instagram followers, 18,000 Twitter followers, and 2,000 Pinterest followers.

The company reported that marketing costs during 1H14 were reduced, as it started to use more targeted tactical campaigns and shifted the spend to digital campaigns. While affiliate and re-targeting marketing currently accounts for less than 5 percent of its web traffic, the retailer said it aims to grow this by 10 to 15 percent.

According to Zahra, traffic analytics was rolled out across the entire store network that will be used in conjunction with new daily productivity reports for individual front line staff to ascertain and benchmark conversion from foot traffic into sales.

"These tools will provide a real-time understanding of individual customers as they shop and interact with David Jones across all channels," the company said.

"This in turn will enable the company to deliver relevant, personalised offers to customers as they transact either in-store or online, as well as personalised post purchase offers and purchase suggestions linked to spend history."

To drive further growth to its core department store business, Zahra said the company has plans to invest in a number of technology projects over the FY14-16 period to help maximise profit margins. These include a new merchandise planning system to help match products to customer demand in hope to reduce the need to discount to clear stock; tools to allow for tighter management of promotions; and an automated rebate deal management system to eliminate the need for manual rebate collection.

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