Department stores of the future are likely to be quite different, retail commentators say.
By Susan Edmunds of RNZ
David Jones has become the latest to hit trouble and was put into receivership on Thursday.
It comes after the closure of Smith & Caughey's, H&J Smith, T Galleria and Kirkcaldie & Stains.
David Jones closed its Wellington shop in 2022.
University of Auckland marketing specialist Mike Lee said department stores used to be the equivalent of small shopping malls, where people had access to a lot of different brands under one roof.
"But these days, consumers have access to those same brands through a multitude of channels, direct brand flagship stores, direct online, other specialist retailers – many of which are also at the shopping mall or within close proximity of where the department store is located.
"So the question people will ask is, 'What would I get from a department store like Smith and Caughey's or David Jones, that I could not also get often cheaper and more conveniently online, at the mall, or from the brand's own store?'
Not a Selfridges or Macy's
"Personally, I visit 277 Newmarket several times a month but I have never gone into David Jones. I suspect I am not alone when the foot traffic of 277 is analysed."
Lee said he thought given New Zealand's relatively low wages and price-consciousness, as well as the fact that David Jones was not a tourist destination like a Selfridges or Macy's might be overseas, shops such as Kmart, Uniqlo or Primark might do better in the same space.
Department Store David Jones closed its doors on Sunday and it’s still not clear what will take it’s place. (Source: 1News)
Retail consultant Chris Wilkinson, of First Retail Group, agreed the picture was different for department stores because retail had changed and big shops needed to offer something unique.
He said the "stores within stores" model had evolved from earlier iterations, when they were made up of different departments.
"The tipping point is where there is no differentiation... they have become landlords for these brands."
He said he had experienced the issue himself when he went into David Jones in Australia looking for a Sportscraft item and was directed to Sportscraft online when it was not available.
But he said there was still the potential for shops such as the luxury, multi-level department store Faradays to do well because they were sufficiently different from what was available elsewhere.
Rise of discount retailers like The Warehouse and Kmart
In other countries, some stores had developed sufficient cachet that well-known brands only wanted to be stocked in them, he said.
Research firm IBISWorld said the market had polarised, with discount retailers like The Warehouse and Kmart expanding their footprints, while Faradays targeted the higher end of the market.
Massey University marketing expert Bodo Lang said the big factors facing retail were experiential retailing, omnichannel shopping and online consumer behaviour.
It's been retail royalty, an icon and stalwart of Central Auckland, selling high-end fashion and homewares since 1880. (Source: 1News)
"Department stores are caught in the middle of this. Department stores are squeezed between online retailers offering convenience, discount retailers offering low prices, and specialist retailers offering expertise.
"What is left for department stores is that physical shopping still fulfils an important experiential and social role. Department stores need to capitalise on that by offering exceptional service, interesting products, and an enjoyable shopping experience.
"Providing an amazing experience can squeeze sales per square metre in a store. But without that, fewer consumers will see a compelling reason to enter a department store. Department stores need to ask themselves: what does our store provide that shoppers value and that we do better than anybody else? If they can answer that question, the future should look bright."
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