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David Jones’ Price Promise Won’t Affect Online-only Retailers: Internet

DJs’ price promise sidesteps online-only retailers

By Michelle Hammond
Wednesday, 02 November 2011

Department store David Jones has vowed to match the prices of online competitors in a bid to curb the growth of internet shopping, but the price promise won’t apply to online-only retailers.

 

David Jones’ price promise is an extension of its existing policy of matching prices on identical items offered by other bricks-and-mortar retailers.

 

While the new strategy is tipped to heighten competition between retail giants, David Jones will not match prices offered by online-only retailers or overseas retailers.

 

But analysts say these retailers represent the biggest threat to department stores such as David Jones and Myer, particularly in categories such as designer apparel, cosmetics and perfume.

 

“Offshore online retail is the biggest threat; that’s where the pricing shortfall is most stark,” CBA equities retail analyst Andrew McLennan says.

 

While online-only retailers won’t be affected by David Jones’ latest sales strategy, a new report reveals consumers are still willing to support traditional retailers, namely via a “try-on” fee.

 

The Canstar Blue report, based on a survey of almost 2,300 Australian consumers, reveals one in four respondents support the idea of a try-on fee.

 

“25% of respondents support the concept as a way to deter consumers from trying on items and buying them later online for a cheaper fee,” Canstar Blue manager Rebecca Logan says.

 

“The public is well aware of how difficult it can be for bricks-and mortar-stores to compete with online businesses, with less overheads and no obligation to pay the various taxes and duties.”

 

“At the moment, try-on charges are mostly confined to specialist retailers who supply items such as wedding dresses, ski suits, cameras and wedding dresses.”

 

“However, industry experts have predicted the trend will spread to other specialist retailers… If this is the case, it seems it may be more broadly accepted by the public than previously thought.”

 

The survey shows NSW residents are the most supportive of a try-on fee (29%). Interestingly, males are more likely to support the change (31%) than females (20%).

 

While consumers support the idea of a try-on fee, they still expect retailers to remain competitive on price, suggesting David Jones’ price promise could be mirrored by smaller retailers.

 

The survey shows 78% of respondents expect more discounts to be offered by bricks-and-mortar retailers as a result of the online retail boom.

 

Brian Walker, managing director of The Retail Doctor Group, says if retailers plan to price match, they should do so in a “covert way”.

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