1 00:00:05,840 --> 00:00:07,640 Speaker 1: Welcome to Fear and Greed Q and A, where we 2 00:00:07,680 --> 00:00:11,360 Speaker 1: ask and answer questions about business, investing, economics, politics and more. 3 00:00:11,400 --> 00:00:15,840 Speaker 1: I'm Sean Aylmer. Are the days of the big department stores? Number? 4 00:00:16,239 --> 00:00:16,799 Speaker 2: In the US? 5 00:00:17,000 --> 00:00:20,720 Speaker 1: Iconic brand Sacks has declared bankruptcy while Macy is closing 6 00:00:20,760 --> 00:00:23,680 Speaker 1: a huge number of stores in an effort to survive. Locally, 7 00:00:23,760 --> 00:00:26,840 Speaker 1: David Jones and Meyer have been closing stores too, as 8 00:00:26,880 --> 00:00:30,720 Speaker 1: the e commerce boom hits and consumer behaviors changes. Professor 9 00:00:30,760 --> 00:00:34,080 Speaker 1: Gary Mortimer is an expert in retail marketing and consumer 10 00:00:34,120 --> 00:00:37,400 Speaker 1: behavior from Queensland University of Technology. Gary. 11 00:00:37,400 --> 00:00:40,000 Speaker 2: Welcome to Fear and Greed Q and A Yeah, Hi Sean, 12 00:00:40,040 --> 00:00:40,680 Speaker 2: great to chat. 13 00:00:41,280 --> 00:00:44,640 Speaker 1: In short? Can both David Jones and Meyer survive? 14 00:00:46,560 --> 00:00:50,320 Speaker 2: I think? In short, what we're really seeing is a 15 00:00:50,360 --> 00:00:55,920 Speaker 2: shift in consumer behavior and also some macro economical issues 16 00:00:55,960 --> 00:00:58,920 Speaker 2: that are having an impact on a big two traditional 17 00:00:58,960 --> 00:01:04,800 Speaker 2: department store. Ultimately, when you think about where department stores 18 00:01:04,840 --> 00:01:08,080 Speaker 2: were in the nineteen ten nineteen twenties and where they 19 00:01:08,080 --> 00:01:10,520 Speaker 2: are today, a lot has changed in the retail sector. 20 00:01:11,280 --> 00:01:14,160 Speaker 1: Okay, so let's dial delve into that. I mean, is 21 00:01:14,160 --> 00:01:16,480 Speaker 1: it just a manner that more people are buying stuff 22 00:01:16,520 --> 00:01:19,880 Speaker 1: online or is it more than that's the people that 23 00:01:19,880 --> 00:01:22,520 Speaker 1: are gaining to bricks and mortar stores are going to 24 00:01:22,760 --> 00:01:25,560 Speaker 1: the Glassons and the Meccas of the world, not to 25 00:01:26,120 --> 00:01:29,160 Speaker 1: Maya which have all those products all in one spot. 26 00:01:29,280 --> 00:01:33,039 Speaker 1: But people actually are preferring to go to specific stores. 27 00:01:34,040 --> 00:01:37,160 Speaker 2: I think it's a combination of factors, not just online. 28 00:01:37,160 --> 00:01:39,880 Speaker 2: If we start with online, you only need to look 29 00:01:39,959 --> 00:01:42,720 Speaker 2: at Meyer and David Jones's annual reports. It shows that 30 00:01:42,760 --> 00:01:45,320 Speaker 2: at least twenty percent, anywhere between twenty to twenty five 31 00:01:45,360 --> 00:01:49,080 Speaker 2: percent of their revenue is now coming from an online channel. Now, 32 00:01:49,200 --> 00:01:51,480 Speaker 2: that suggests that you could probably fulfill those orders in 33 00:01:51,520 --> 00:01:54,800 Speaker 2: a central location from a central warehouse, and you could 34 00:01:54,840 --> 00:01:58,000 Speaker 2: reduce your store fleet by further twenty percent without really 35 00:01:58,200 --> 00:02:02,080 Speaker 2: attaining a material loss. So the online despite it actually 36 00:02:02,200 --> 00:02:06,640 Speaker 2: coming from both Meyra and David Jones and adding revenue 37 00:02:06,680 --> 00:02:11,560 Speaker 2: to those businesses, running a physical store has costs, whereas 38 00:02:11,560 --> 00:02:15,000 Speaker 2: an online doesn't. You can distribute it centrally, and I 39 00:02:15,000 --> 00:02:18,160 Speaker 2: think that's why we're seeing initially store closures and have 40 00:02:18,240 --> 00:02:21,680 Speaker 2: done for the last decade. As they understand their customers 41 00:02:21,720 --> 00:02:25,280 Speaker 2: they call customers in our shopping online, the other one 42 00:02:25,280 --> 00:02:26,680 Speaker 2: you talk about is, you know, why don't we just 43 00:02:26,680 --> 00:02:29,320 Speaker 2: go buy, you know, from Sephora or Mecca. And I 44 00:02:29,360 --> 00:02:31,720 Speaker 2: think that's what shoppers are doing. And if we think 45 00:02:31,760 --> 00:02:34,960 Speaker 2: about the big department stores in the sixties and seventies, 46 00:02:35,400 --> 00:02:38,240 Speaker 2: even the early eighties, I remember that my father bought 47 00:02:38,360 --> 00:02:41,959 Speaker 2: our first VCR for am Meyer at Strathpine and we did. 48 00:02:41,960 --> 00:02:45,600 Speaker 2: We bought furniture there, embedding and control electronics. You know, 49 00:02:45,680 --> 00:02:48,440 Speaker 2: Maya for a while had an automotive department. We bought 50 00:02:48,440 --> 00:02:52,359 Speaker 2: sporting goods. When you think through those big categories, they're 51 00:02:52,400 --> 00:02:56,720 Speaker 2: now dominated by specially goods retailers like Rebel Sport, Harvey Norman, Freedom, 52 00:02:56,760 --> 00:03:01,240 Speaker 2: ike Ka and the rest. And of course, still remaining 53 00:03:01,880 --> 00:03:05,440 Speaker 2: as a viable option for department sours was cosmetics. So 54 00:03:05,520 --> 00:03:09,240 Speaker 2: those cosmetics flows always quite profitable. But now we've seen 55 00:03:09,240 --> 00:03:14,040 Speaker 2: the likes of Sephora, Mexican Cosmetica enter the marketplace, which 56 00:03:14,520 --> 00:03:17,480 Speaker 2: now present exactly the same offer. Yeah. 57 00:03:17,800 --> 00:03:21,960 Speaker 1: Is it that consumers are just becoming more precious about 58 00:03:22,000 --> 00:03:23,560 Speaker 1: what they're buying them In that sense, I've got a 59 00:03:23,560 --> 00:03:26,080 Speaker 1: poor value judgment there. I don't mean that, you know, 60 00:03:26,160 --> 00:03:30,040 Speaker 1: my daughter would certainly go to Mecca or Sephora seventeen 61 00:03:30,120 --> 00:03:33,040 Speaker 1: year old or Glassen or those sorts of clothing products 62 00:03:33,040 --> 00:03:35,720 Speaker 1: before she'd go to Maya. But is it more like 63 00:03:35,800 --> 00:03:38,560 Speaker 1: this shopping experience if I walk into Mecca or Sephora, 64 00:03:39,000 --> 00:03:41,120 Speaker 1: is you know it's great for me, but you know 65 00:03:41,160 --> 00:03:44,680 Speaker 1: for a seventeen year old girl, it's incredible. You get 66 00:03:44,840 --> 00:03:47,680 Speaker 1: free samples, you get people talking to you like, there's 67 00:03:47,760 --> 00:03:50,400 Speaker 1: kind of a real feel for Jbhi Fi. Often think, 68 00:03:50,400 --> 00:03:51,839 Speaker 1: you know, I walk in JB. High Fi and peel 69 00:03:51,840 --> 00:03:54,080 Speaker 1: about twenty years younger than I am. It's that kind 70 00:03:54,080 --> 00:03:57,720 Speaker 1: of experiencing which I suppose that department stores just can't match. 71 00:03:58,480 --> 00:04:01,600 Speaker 2: No, No, I guess. I guess we're talking about generational 72 00:04:01,640 --> 00:04:07,440 Speaker 2: shifts and generational changes. And my grandparents, my parents shopped 73 00:04:07,480 --> 00:04:09,760 Speaker 2: at Meyra and David Jones up here in Queens and 74 00:04:09,840 --> 00:04:12,880 Speaker 2: they shopped at mcdonnaland East. You know, I worked for 75 00:04:12,960 --> 00:04:15,840 Speaker 2: Grace Brothers in Sydney for several years. I grew up 76 00:04:15,880 --> 00:04:19,279 Speaker 2: in Adelaide, which had John Martin's. If you're from Perth, 77 00:04:19,320 --> 00:04:23,359 Speaker 2: you would know Bones department stores. So there's lots of 78 00:04:23,400 --> 00:04:29,160 Speaker 2: department stores that are sort of closed or been purchased 79 00:04:29,279 --> 00:04:33,080 Speaker 2: brought up by the likes of Meyra and David Jones. 80 00:04:33,360 --> 00:04:36,600 Speaker 2: So as we get younger generations, and I think about 81 00:04:36,640 --> 00:04:40,080 Speaker 2: my daughter who's twenty three at my assignments twenty that 82 00:04:40,600 --> 00:04:44,400 Speaker 2: with the big traditional department stores, they're shopping at eb Gains, 83 00:04:44,560 --> 00:04:46,920 Speaker 2: or they're shopping at Rebel Sport, or they're shopping at 84 00:04:47,279 --> 00:04:48,040 Speaker 2: Well at Mecca. 85 00:04:48,560 --> 00:04:51,800 Speaker 1: Yeah, So what's the prognosis for David Jones which is 86 00:04:51,839 --> 00:04:55,719 Speaker 1: privately owned. It's owned by a South African based company. 87 00:04:55,960 --> 00:05:00,559 Speaker 1: Mayer is listed here. Can they make it listen? 88 00:05:00,839 --> 00:05:04,359 Speaker 2: I think ultimately the one thing that will save department 89 00:05:04,440 --> 00:05:08,080 Speaker 2: stores is the customer experience that you've discussed and talked about. 90 00:05:08,920 --> 00:05:11,599 Speaker 2: You don't go to a department store to buy fashion 91 00:05:11,640 --> 00:05:13,840 Speaker 2: because you can buy fashion anywhere, and now we obviously 92 00:05:13,880 --> 00:05:17,560 Speaker 2: got the influx of high per low price fashion providers 93 00:05:17,640 --> 00:05:20,920 Speaker 2: like Teme Machine, but you would go there for the experience. 94 00:05:20,960 --> 00:05:23,640 Speaker 2: And I always call out David Jones in Sydney and 95 00:05:23,640 --> 00:05:26,840 Speaker 2: Elizabeth Street for its experience it provides. And I walk 96 00:05:26,880 --> 00:05:29,279 Speaker 2: into that store and on the bottom floor is the 97 00:05:29,320 --> 00:05:32,760 Speaker 2: cosmetics department, but there's a pianist playing a piano. As 98 00:05:32,760 --> 00:05:34,839 Speaker 2: you go up through the store, there's greets at the 99 00:05:34,839 --> 00:05:37,080 Speaker 2: top of every floor, announcing you onto the floor and 100 00:05:37,080 --> 00:05:40,799 Speaker 2: giving you direction. And I think about those iconic department stores, 101 00:05:40,839 --> 00:05:45,120 Speaker 2: global ones like Galleries Lafayette or Harrod's or Selfridges. They 102 00:05:45,120 --> 00:05:49,159 Speaker 2: will have champagne and oyster bars and amazing coffee. So 103 00:05:49,240 --> 00:05:53,320 Speaker 2: it's not about just purchasing, it's about the experience. Now, 104 00:05:53,360 --> 00:05:56,159 Speaker 2: obviously you can't do that with sixty stores. You can't 105 00:05:56,200 --> 00:05:58,799 Speaker 2: have oyster bars and champagne bars and penis and sixty 106 00:05:58,800 --> 00:06:02,000 Speaker 2: seven stores. You can do it with half a dozen stores, 107 00:06:02,400 --> 00:06:06,120 Speaker 2: you know, in mega centers like Bond Di Junction or 108 00:06:06,240 --> 00:06:10,960 Speaker 2: CBD locations. So I think what we'll see department stores 109 00:06:11,680 --> 00:06:14,280 Speaker 2: continuing to right size their fleets, so closed stores or 110 00:06:14,400 --> 00:06:21,000 Speaker 2: closed floors and focus more on value added services and experiences. 111 00:06:22,080 --> 00:06:25,000 Speaker 1: Okay, so that's what's happening overseas. So we mentioned tax 112 00:06:25,080 --> 00:06:29,040 Speaker 1: went into bankruptcy. Macy's is closing a number of stores. 113 00:06:29,080 --> 00:06:31,479 Speaker 1: And for those who don't know, sort of Taxi Avenue 114 00:06:31,480 --> 00:06:35,880 Speaker 1: and Macy's big American brands, but they were across the country. 115 00:06:35,880 --> 00:06:38,720 Speaker 1: They weren't just in New York where most people experienced them. 116 00:06:38,760 --> 00:06:42,880 Speaker 1: They really were everywhere, and they are closing down kind 117 00:06:42,880 --> 00:06:46,840 Speaker 1: of left, right and center. Is that something I mean, 118 00:06:46,839 --> 00:06:49,960 Speaker 1: did you think those guys can compete or is it 119 00:06:49,960 --> 00:06:51,920 Speaker 1: something you know? It's the same story in the US 120 00:06:51,960 --> 00:06:52,400 Speaker 1: as here. 121 00:06:53,200 --> 00:06:56,200 Speaker 2: Well, it's obviously the US has got a significantly larger 122 00:06:57,240 --> 00:07:00,920 Speaker 2: population three hundred and eighty six million competitors twenty eight million. 123 00:07:00,960 --> 00:07:06,480 Speaker 2: Here in Australia, we're constrained the East and Seaboard predominantly. 124 00:07:08,000 --> 00:07:12,600 Speaker 2: And you're right, you know, we've seen seas close completely Macy's, 125 00:07:12,680 --> 00:07:16,360 Speaker 2: which is on par with Meyer, so it's a you know, 126 00:07:16,520 --> 00:07:20,640 Speaker 2: it's a lower cost, full line department store. They've continued 127 00:07:20,680 --> 00:07:22,840 Speaker 2: to close stores. But I was in New York only 128 00:07:22,880 --> 00:07:26,440 Speaker 2: earlier this month that Macy's in Manhattan, and it was 129 00:07:26,480 --> 00:07:29,280 Speaker 2: it was pumping because it's a flagship store and it's 130 00:07:29,320 --> 00:07:32,280 Speaker 2: in Manhattan, and I think everybody seems to go there. 131 00:07:32,800 --> 00:07:36,000 Speaker 2: So I do think that what we will see is 132 00:07:36,800 --> 00:07:40,080 Speaker 2: David Jones, which is one of the world's, if not 133 00:07:40,200 --> 00:07:42,880 Speaker 2: the world's, oldest department store one hundred and eighty seven 134 00:07:43,000 --> 00:07:46,000 Speaker 2: hundred and eight years old. Now David Jones, I think 135 00:07:46,000 --> 00:07:49,720 Speaker 2: it will continue to focus on that premium customer experience, 136 00:07:49,800 --> 00:07:53,120 Speaker 2: and it will focus I suspect in those CBD locations 137 00:07:53,160 --> 00:07:55,560 Speaker 2: or in those mega centers where they can add value. 138 00:07:56,280 --> 00:07:58,680 Speaker 2: When I think about some of the stores David Jones 139 00:07:58,760 --> 00:08:01,560 Speaker 2: and Meyer have closed, they have closed in those older 140 00:08:01,600 --> 00:08:04,280 Speaker 2: suburbs where in the forties and the fifties that's where 141 00:08:04,280 --> 00:08:07,640 Speaker 2: people went to buy, and that whole demography has changed 142 00:08:07,680 --> 00:08:10,360 Speaker 2: within those suburbs now they're now working class suburbs and 143 00:08:10,400 --> 00:08:14,400 Speaker 2: people now shop elsewhere. Maya is interesting. I think Meyer 144 00:08:14,480 --> 00:08:18,400 Speaker 2: continues to focus on Macy's experience sort of mid tier, 145 00:08:18,600 --> 00:08:21,520 Speaker 2: mid price with a range of offers, and I think 146 00:08:21,560 --> 00:08:24,679 Speaker 2: that's probably where it will end up again, smaller fleet 147 00:08:24,680 --> 00:08:29,200 Speaker 2: of stores and probably in that Harris Garf value department store. 148 00:08:29,800 --> 00:08:33,200 Speaker 1: Okay, Olivia Worth is the CEO of Meyer. She came 149 00:08:33,320 --> 00:08:37,800 Speaker 1: from Quantus Frequent Flyer Points. She's clearly pushing the frequent 150 00:08:37,880 --> 00:08:43,440 Speaker 1: flyer or the frequent shopper experience. Is that I mean, 151 00:08:43,440 --> 00:08:45,920 Speaker 1: it's not is that enough to save Meyer? That's not 152 00:08:46,000 --> 00:08:48,720 Speaker 1: quite the right question. But is that how much of 153 00:08:48,720 --> 00:08:51,640 Speaker 1: a drive difference do you think that can make? Too? 154 00:08:51,640 --> 00:08:55,920 Speaker 2: Maya y Obviously, both Doug Jones and Meyer have focused 155 00:08:56,000 --> 00:09:01,840 Speaker 2: heavily on loyalty programs types between at the airlines and 156 00:09:02,040 --> 00:09:06,720 Speaker 2: points A cruels and things like that. Loyalty is a 157 00:09:06,800 --> 00:09:09,480 Speaker 2: challenge to run at the best of time, so we 158 00:09:09,559 --> 00:09:13,160 Speaker 2: tend to get confumes between behavioral loyalty. I go there 159 00:09:13,160 --> 00:09:16,880 Speaker 2: all the time money to maximize my points versus attitudinal loyalty, 160 00:09:16,920 --> 00:09:19,640 Speaker 2: which is I generally go there because not about points, 161 00:09:19,640 --> 00:09:22,560 Speaker 2: not about discounts. I really want the experience and I 162 00:09:22,559 --> 00:09:26,520 Speaker 2: love the brand. So I think measuring points may not 163 00:09:26,679 --> 00:09:29,559 Speaker 2: work for a big, full line premium department, so or 164 00:09:29,559 --> 00:09:32,240 Speaker 2: it works well for supermarkets because we stop there regularly 165 00:09:33,000 --> 00:09:35,720 Speaker 2: and we can shop across both supermarkets and get exactly 166 00:09:35,720 --> 00:09:38,880 Speaker 2: the same pricing, exactly the same brand. So we're certainly 167 00:09:38,880 --> 00:09:41,400 Speaker 2: looking for those discounts, and we're looking for those loyalty 168 00:09:41,440 --> 00:09:44,360 Speaker 2: points that we can accrue and then use to make 169 00:09:44,400 --> 00:09:46,880 Speaker 2: further purchases. But when it comes to buying maybe a 170 00:09:46,880 --> 00:09:50,560 Speaker 2: three thousand dollars men's will suit, I'm not that interested 171 00:09:50,559 --> 00:09:52,600 Speaker 2: in points, and I don't think most people are. I 172 00:09:52,640 --> 00:09:55,559 Speaker 2: think what we want is expert tailoring and great service. 173 00:09:55,840 --> 00:09:58,319 Speaker 1: Gary, thanks for talking to your and green jeers take it. 174 00:09:58,720 --> 00:10:02,160 Speaker 1: That was Professor Gary mort from Queensland University of Technology. 175 00:10:02,240 --> 00:10:04,360 Speaker 1: I'm Sean Almer and this is the fearing Greek q 176 00:10:04,520 --> 00:10:04,679 Speaker 1: and a