Chanel and champagne: David Jones bets luxury will revive its fortunes
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Chanel and champagne: David Jones bets luxury will revive its fortunes

David Jones’ boss has pledged to fight back against the forces that have up-ended department stores worldwide with a strategy based on luxury brands, better customer service and a product range that brings “the best of the world together in one place”.

The 180-year-old department store chain on Wednesday announced that the exclusive labels Louis Vuitton, Chanel and Gucci would open in-store boutiques at its flagship Elizabeth Street store in Sydney as part of a $200 million redevelopment.

 David Jones chief executive David Thomas looks to luxury brands to revive sales.

David Jones chief executive David Thomas looks to luxury brands to revive sales.Credit:Janie Barrett

The company hopes creating a high-end experience akin to shopping at Harrods in London or Galeries Lafayette in Paris will help arrest the falling sales both it and arch-rival Myer have suffered amid weak spending, and consumers shifting to specialty retailers and online shopping.

Its South African owner Woolworths Holdings slashed the value of the chain in its books by one third earlier this year in a $712 million write-down.

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David Jones chief executive David Thomas said department stores could still be relevant to consumers, but had to play to their strength of being a "mall without the shopfronts" by offering a wide range of the best products, and customer service to match.

“So you come in for a black boot, we should be able to show you the 10 best black boots on the market, as opposed to going into one brand in a mall, where you can only see their offering,” he said.

An artist's impression of the new Elizabeth Street store.

An artist's impression of the new Elizabeth Street store.

“It’s far less intimidating than walking into a specialty store and far more convenient.

“That’s how we fight back, that’s the role of the department store.”

The $200 million redevelopment of the Elizabeth Street store, funded by the $360 million sale of the chain's Market Street store in 2016, will see it expanding from eight floors to 12, with the offering grouped across six product “worlds” , the company revealed on Wednesday.

A key part of the redevelopment will convert the seventh and eight floors into a champagne and dining room that will overlook a luxury shoe department featuring Louis Vuitton, Chanel and Gucci, which would be unlike anything “ever seen” in Australia, Mr Thomas said.

Artist impression of the new seventh floor of the David Jones building in Sydney.

Artist impression of the new seventh floor of the David Jones building in Sydney.

Louis Vuitton and Gucci will also open stores selling leather goods, ready to wear clothing and accessories on a ground floor luxury area.

The two lowest levels, including the basement currently used for storage, will be converted to a combined homewares, food and dining area, based on the food concept rolled out at the company's nearby Bondi Junction store.

Not all of its 45 stores will sell high-end products, however, with each outlet “edited” depending on its local customer profile, Mr Thomas said.

However he said putting luxury brands front and centre in the flagship store would have a positive “halo effect” on the rest business.

Bringing the right brands in at the top-end actually solidifies right through the business

"Bringing the right brands in at the top-end actually solidifies right through the business," he said.

The Elizabeth Street store is being renovated floor-by-floor under the revamp, which should be completed around late 2019.

Mr Thomas said the loss of sales due to disruption would be significant, but that the renovation would deliver good returns to Woolworths over time.

While many retailers are looking to close underperforming stores, Mr Thomas said David Jones was currently more inclined to reduce a store's floor space to improve performance. Shrinking its store in Campbelltown, NSW, by more than half 12 months ago helped turn it from a struggling outlet into "quite a good store", he said.

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David Jones' comparable sales fell 3.3 per cent in the last half and its profit fell by a third, which it attributed to poor consumer sentiment and some self-inflicted damage, including poor private label clothing designed in South Africa.

Mr Thomas said a new range of private label apparel designed with sister company Country Road was performing well.

Wednesday marked Mr Thomas' first public comments since the departure of Woolworth's local boss John Dixon, and he now reports directly to group's boss Ian Moir in Cape Town.