Department stores Myer and David Jones are in the midst of the most aggressive mid-year sales campaign in recent history. Assia Benmedjdoub asks the independents what this means for them.
We are holding as tight as possible.”
“But the big guys...”
“We have a strategy in place, however we assess it every week.”
Rachael Cotra is in the midst of a long and bloody conflict. She is the director of Fat 4, a string of designer boutiques located across Melbourne’s GPO complex, Prahran, Fitzroy and Chadstone Shopping Centre. Her battlespeak comes with good reason. All four sites are situated within close proximity to a major department store; stores which have ramped up months of subtle discounting with arguably the biggest mid-year sales campaigns to date.
Brought forward to June 2, Myer and David Jones commenced their early mid-year sales drive by slashing millions of accessory, apparel and footwear units by up to 70 per cent. The move followed sobering retail sales figures from the Australian Bureau of Statistics, indicating turnover in department stores had fallen by 2.4 per cent in April. Sobering still, this was down 4.7 per cent from the $1.6 billion in sales generated in April 2008.
For Cotra, who retails premium designer products from the likes of Comme Des Garcons, Skinny Nelson, Chronicles of Never and Antipodium, the ensuing bloodbath was a test of sales strategy. Some nearby competitors kicked off the sales season with a whopping 50 per cent off merchandise.
“We are holding tight as possible with markdowns but the big guys do normally have a trickle-down effect,” Cotra said. “We have just implemented first markdowns for stock that arrived in February and this is the 90 to 120 day range. We’ve gone with 10 to 20 per cent markdowns on first winter deliveries.”
Over in Canberra, Roslyn Wright has noticed a sharp shift in activity at her two stores, Soho Dezigns and Momento Dezigns. The latter is positioned at the higher end of the market with labels including Ginger & Smart, Thurley and Manning Cartell.
“Our city store Soho Dezigns is close to both department stores and has been far more impacted by the sales,” Wright said. “The foot traffic in the city store, which has street frontage, has been noticeably less. This is not as evident at our Manuka store, which has no department store in the suburb.”
Needless to say, sales at both stores commenced 10 days earlier than usual, starting at 20 to 40 per cent off instead of the standard 20.
“The sales in the city have been so intense that people will not walk in at this time if they don’t see a sale sign,” Wright explained. “We’re discounting mainly older stock and big ticket items, generally going harder and earlier than usual as we feel we have no option. I will obviously have to get to the 50 per cent off mark earlier this year in order to compete with everyone else.”
Cotra has made a concerted effort to buy styles not offered through department stores; ramped up customer styling services; emphasised her ‘one stop shopping’ experience with a broader footwear and accessories offer; and driven online and advertising promotions.
“Luckily for me, less designer brands are represented in Canberra department stores as it is obviously not viable for them due to the relatively small population here and, of course, the conservative nature of the ACT itself,” she said.
For major cities like Sydney, aggressive discounting by department stores could have broader implications for designers who service them. Independent retailer Pretty Dog specialises in niche brands such as Friedrich Gray, Dion Lee, Gary Bigeni, Therese Rawsthorne, Maise and Maje.
Owner Tanya Stevanovic is more cautious about purchasing designers who retail through Myer and David Jones, believing there could be less time to sell the labels at an acceptable margin.
“For many new designers, landing an account with a department store is their first big break, but it could be a fatal decision if they end up in the bargain bin mid-season,” she warned. “If we take on a new label that is also stocked in a department store, we will always keep a close eye on its performance. We will cap the amount we spend on the order because of the very real possibility of a department store reducing the price at any time.”
The same goes for online retailers, despite the ability to sell across national and international markets. South Australian-headquartered boutique The New Guard offers a mix of upmarket designer brands such as Ellery, Dion Lee, Acne and Alexander Wang.
Director Anna Sergiou kicked off her mid-year sales campaign much earlier than competitors, reducing Dion Lee platforms from $880 to $440 and Acne jackets from $799 to $399, among other options in May.
“We do four collections with designers per year so sales are much more frequent,” she said. “We decipher these by analysing sell-through of collections or if we have odd sizes left – we don’t follow the pack and I am sure this is how David Jones and Myer decide [their sales dates] also. Their buying style is more commercial, so we have moved into buying more avant-garde pieces from the designers we cross over with.”