‘Economies of scale’: Retail experts revisit idea of Myer, DJs merger

“There are certainly economies of scale if you merge the two, deal with one set of suppliers and develop a sophisticated private label range, and focus on [retail] experience,” he said.

Retail historian at Macquarie University, Dr Matthew Bailey, said any future buyer of David Jones would have to work out what edge department stores have over other bricks-and-mortar retailers, however.

“The longer-term issues facing department stores of intense quality competition in every product category that they sell,” he said.

“The question of relevance is to find what their competitive advantage is.”

David Jones and Myer have both expressed optimism in recent months about consumer spending, with Myer forecasting strong profit numbers while David Jones recorded a slight decline in profits due to the effects of lockdowns in 2021.

David Jones boss Scott Fyfe said on Tuesday that while there is no doubt the economic outlook is uncertain, the retailer is showing a post-COVID bounce back.

Loading

“Interestingly, what our results across the last year or so have shown is that, outside of a lockdown environment, customers flock back to their retail purchases in a big way with steadily building footfall and consistently increasing online shopping traffic,” he said.

Retail analysts agree that no matter how ownership of the stores plays out in coming months, both David Jones and Myer have strong brand equity.

Oberg said if the two companies were to come under the same ownership, he expected both brands could continue to operate rather than a new company identity being established.

“ I think there is still a lot of goodwill in the brands. But there’s a question of whether you’d need a Myer and a David Jones in the same block,” he said.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.