One of Britain’s leading premium department store groups, John Lewis, have signed a partnership with Myer and are heading to Australia. By the end of the year, the department store within a department store concept will open up first in Warringah Mall, NSW followed by rapid expansion across a further five shopping centres across the country.
Source: The Age
One of the UK’s premier and largest department stores groups, John Lewis, is heading to Australia in partnership with Myer. John Lewis needs a local partner to help it with the geographic colonisation. Myer needs continued infusion of new brand blood. It looks like a good match.
By the end of the year the first of this new “department store within a department store” concept will open in Sydney’s Northern Beaches Warringah Mall retail centre followed by rapid-fire expansion into five other retail centres – the Sydney and Melbourne CBDs, Melbourne’s Chadstone, Bondi Junction in Sydney’s eastern suburbs and Perth.
It’s a retail experiment which, if successful, will be extended further within the Myer network. And it is one that will initially involve the John Lewis successful homewares category.
For John Lewis, opening a physical beachhead in Australia is part of a broader strategy of setting up operations in several other countries.
For Myer it represents a significant step in its multi-year revival plan that aims to make its department store more relevant and more competitive against its arch-rival David Jones and the multitude of chain stores and online operators that have been eating into its revenues for years.
It comes at a time when Australian department stores are having to battle new international category-specific entrants, particularly in apparel – the likes of Zara and H&M – that have entered into and expanded in the Australian market over the past few years.
And Myer in particular has also needed to contend with a reinvigorated David Jones which is now owned by Woolworths of South Africa. This week David Jones delivered a strong full financial year sales result but one that suggests the sales growth has tailed off in this calendar year.
Myer’s sales performance was up 3.4 per cent in the three months to April 2016 but most expect it will also have felt the headwinds of a very late winter and weak consumer sentiment in the period to June.
Last year Myer introduced the successful international apparel retailer Topshop in its stores – but at the same time had to compete with this group’s standalone operations, often within the same retail complex.
Unlike the Topshop relationship which operates as a concession store run and staffed by Topshop employees, the John Lewis venture will adopt the “supplier model” in its relationship with Myer. It is one that Myer’s chief merchandising and marketing manager Daniel Bracken describes as a wholesale relationship – “a bespoke concept store – a shop within a shop with a John Lewis store design”.
On offer will be bedding, including bed linen, doonas, throws, cushions, quilts and bed accessories; dinnerware, glassware, table linen and cutlery; plus decorator items like vases, frames, bowls, candle holders, light shades and bathroom accessories.
The tie-up will be the culmination of more than a year of negotiations between the two department stores. John Lewis said had it spoken to other potential partners in Australia, which suggests it had also looked at David Jones.
Head of international retail at John Lewis Katie Jordan said Australia was an obvious choice for international expansion as it has been one of the top five destinations for John Lewis online.
John Lewis’s expansion model, of picking a department store to partner with rather than opening standalone operations, is clearly a more cost-effective and less risky mode of entry into a new market as it allows it to piggyback the local market knowledge of its partner.
The test for this new department store experiment for both partners will be to see if the John Lewis brand can bring fresh customers into Myer,
Where Topshop was a very well-recognised brand in Australia and one that Myer counted on to bring foot traffic into the store, John Lewis is far less known to the average Australian.
Having said this, John Lewis – and in particular its homewares – is very popular in its home market and will resonate with British expatriates and Australians that have lived in the UK.
It will also add a much-needed product facelift to Myer’s homewares offer.
For John Lewis, which already has a very successful online business, the establishment of physical presence in Australia could be extended beyond homewares.
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