Evolution of Retail Sector in Australia

This report discusses about the evolution of the department store along with discount store in Australia. It also elaborates on the historical development of department along with discount stores and the driving forces that led to the evolution of the retail industry in Australia. The report also talks about the future of retailing and the kind of stores that will come up in the market.

Running head: EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
Evolution of Retail Sector in Australia
Name of the student
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1EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
Executive Summary
The primary purpose of this report is to elucidate on the changing face pertaining to retaining
in Australia. It discusses about the evolution of department stores and that of discount stores
in Australia. It throws light on the historical development of the department stores and the
factors that lead to the evolution of these department stores. It talks about the future of
retailing and the kind of stores that will come up in the market.

2EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
Table of Contents
Introduction................................................................................................................................3
Historical development of Department and Discount stores......................................................3
Face of future retailing...............................................................................................................6
Conclusion:................................................................................................................................8
References:.................................................................................................................................9

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Introduction
Department store refers to a retail establishment that offers different kinds of
consumer goods in product categories that are known as “department”. The department stores
came into being in the 19th century and it helped in shaping the shopping habit of the people.
Discount store refers to a retail shop that sell product at a price that is lower as compared to
market price (Goworek, McGoldrick and McGoldrick 2015). This report discusses about the
evolution of the department store along with discount store in Australia. It also elaborates on
the historical development of department along with discount stores and the driving forces
that led to the evolution of the retail industry in Australia. It elaborates on the change that will
take place in retailing within a span of 5 and 10 years.
Historical development of Department and Discount stores
David Jones was inaugurated by the Welsh Merchant David Jones and he met the
Hobart businessman called Charles Appleton within London. Appleton was instrumental in
establishing a store within Sydney in the year 1825. Jones consequently entered into a
partnership with Charles Appleton and in the year 1835 moved to Australia. Sydney store
started to be called Appleton & Jones. Jones was instrumental in moving the business to the
end of the George Street. David Jones can be said to be oldest department store within the
world which is trading under the original name.
The department store that came up earliest within Melbourne was called Coles Book
Arcade. The vast premises of Edward Cole extended from the south of Bourke Street Mall
and it extended to an area of two city blocks. It included various kind of departments like
book, glass, china department, tea rooms, photographic studio, stationery department and
confectionary department (Varley and Rafiq 2014). It also had a permanent musical band that

4EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
helped in entertaining the customers, library along with other establishments. In the present
age, store is known for the Coles Funny Picture books that were meant for the children.
The Australian department store performed very badly owing to the challenge of the
online competition, the entry of the international retailers and the weak sentiment of the
consumers. The decline of the department stores occurred owing to the botched online
strategy, poor service along with operational issues. The department store in the initial stage
started as retail innovator and the changing consumer environment led to the evolution of the
department store in Australia (Ritzer 2015). The distribution of mass produced goods led to
the starting of the department stores within Australia. Scale of operations along with breadth
of the product ranges helped in establishing the dominance of the retail sector. The
competitive advantage of the department stores eroded with the passage of time.
The department stores reached their height in inter-war years and it faced setback at
the time of Great Depression along with World War II. It occupied the imagination of the
consumer along with urban skyline till late 1950. The retail pre-eminence of the department
stores was on the basis of urban environment and it was built around that of public transport.
Scrambled merchandising is indicative of the practice of the wholesalers that carries wider
assortment in relation to the merchandise (Hortaçsu and Syverson 2015). The department
stores used this model that helped them in becoming popular. Goods were kept that were
unrelated to each other and this helped in the flourishing of the department stores in
Australia. Rise of the automobiles posed a threat to the presence of the department stores in
Australia. The city stores that were able to survive for the longest time within Australia
includes David Jones and Myers that embraced the aspect of suburban expansion with the
help of shopping centre development (Cox 2016).

5EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
The department stores took tenancy within the shopping centres and this innovation
helped in sustaining and prolonging the lifespan of the department stores in Australia.
Specialist retailers started serving as department that led to the emergence of the shopping
center. Department stores were able to buy the customer loyalty as they offered exclusive
credit provision. This took place with the help of store cards that the customers could make
use of for making purchase at that particular store along with the different branches (Scott
2017). Bankcard roll out started in the year 1974 and it was followed by bank credit cards. It
helped in democratisation of the credit provision that made the customers to feel free of
shopping at whatever place they liked.
Next existential threat for department stores came up in the form of discount stores
that used the model of self-service supermarket retail for the selling of department store
merchandise. The figures that were provided reveal that in the year 1974 the traditional
department stores accounted for only 27 percent of that of the sales department store type
merchandise. In the year 1991, it came down to 12 percent and then 11 percent respectively.
It thus became difficult for the department store along with discount stores to survive in the
market not only owing to the competition that they got from each other but also because of
the “category killer” that took the model of self-service (Bailey 2017).
The merger along with acquisition has become strategically important for a business
in the present age. These processes can help in consolidating the two business that can help in
increasing market share along with profits within the industry. In the event of two companies
combining and giving birth to a single unit it can be called a merger. Acquisition on the other
hand is indicative of purchasing of company by another company and no new companies are
formed in this case (Brimblecombe et al. 2017). This process of restructuring has emerged to
become popular in the present age and this process can help in capturing greater proportion of

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market share of the firms. The mergers and acquisitions paved the path for the decline of
department and the discount stores.
The cost-containment approach is being undertaken by the retailers in the present age
that can help a company in making profits. Volatility pertaining to the economy compels
many firms to take recourse to this strategy (Bailey 2016). The companies can make use of
secondary location along with in locations of the older strip center that can increase the
profitability of a business. The stores can be placed in small communities that has less strict
building regulation which led to the disappearance of the department stores along with
discount stores.
Retail lifecycle refers to the concept that the retailers go through different stages-ups
and the downs that can help in bringing about discernible stage pertaining to growth along
with decline. The retail organizations pass through different stages like innovation,
development, maturity and that of decline (Abc.net.au 2018). The department stores of
Australia could not compete against that of the international retailors along with online
retailing that led to their decline. The discount stores then became popular that used model of
the self-service retail. The discount stores also could not suffer the immense amount of
competition in the market and they gradually disappeared from the market.
Face of future retailing
The growth prospects of the department stores within Australia remains conservative.
In the last five years, the revenue of the department store industry within Australia has
lessened at an annual rate of that of 1.8 percent to make it a total of $ 18.7 billion. The profit
margins have contracted to a great extent in the year 2014 and it currently represents 5.8
percent of that of the revenue. The growth prospects of the department stores is grim and it is
being estimated that it can rise by a meagre amount of 0.9 percent (Pursuit.unimelb.edu.au

7EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
2018). Improvements have been brought about in the overall economic condition of Australia
but the consumers continue to stay within a frugal frame of the mind. The trend of
deleveraging is taking place and this puts significant amount of pressure on the element of
discretionary spending. The household savings ratio of the Australians are at a low of that of
3.9 percent in the year 2008 and it has currently reached 9.9 percent. This causes the retail
store like David Jones to lose out in the trend. Low price growth in the present age and that of
strong Australian dollar has made cost reduction pass on to the consumers within last few
years that has kept the revenue low (Intergenpropertygroup.com.au 2018). The industry of
department stores have been hit hardly owing to rapid growth pertaining to online retailing.
Online stores were able to make profits with the help of a different kind of business model
that had lowr overhead cost after achieving of scale. The international department stores that
invests to a great extent on online retail platform are instrumental in selling similar products
in a season and the pricing cycle is ahead of the Australian counterparts
(Acahuch.msd.unimelb.edu.au 2018).
The two department store chain of Australia called Target along with Big W have
made poor profit or loss in last five years. The owners of these firms have not issued any
timeframe pertaining to recovery. The online competitors forced the department store to
lower the prices. The entry of the international bricks along with mortar competitors have
captured a large part of the market share in relation to apparel, electrical along with the home
ware (Digitalpulse.pwc.com.au 2018). Lack of growth of the wages, concerns regarding
economy along with instability within global financial market have played havoc with that of
sentiment.
The department stores can curate the products and create new products that can help
them in the aspect of surviving within the market. The department stores should consider
platforms that can help in putting the customers in control that can help in the process of

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creation of their own collection. The department stores can unify virtual along with physical
shopping experience that can help in delivering better service to the customers. The
department stores can take recourse to consistent pricing, connect with the local communities
that can help them in delivering something unique to the customers. Technology can be made
use of by the department stores that can help them in gaining greater amount of control over
the market.
The inventory of a department store is being defined by the help of buyers and in the
case of online retail it is shaped with the help of customers. The department stores can be
successful in the future in the event of adoption of an omnichannel way. They can make use
of curated range of the products along with in-store service like interior design consultancy
that can provide competitive advantage to the department stores. Online retaining is a process
that offers the customers the opportunity of selecting and purchasing of products. The
consumers can search for information over the internet and hence online retailing will
become greatly popular in the future and replace the department along with the discount
stores.
Conclusion:
Initially the department stores started out as retail innovator and the changes taking
place in the consumer environment led to creation of department stores within Australia.
Mass produced goods being distributed paved the path for opening of department stores in
Australia. The breadth pertaining to variety of the products along with the scale of the
operation helped in making the retail stores more dominant. Department stores reached their
greatest height in that of the inter-war years and it declined at the time of Great Depression.
Restructuring led to the destruction of the department and discount stores in Australia. This
helped them in capturing a large share of the market. Mergers along with acquisitions led to
the decline of the department stores in Australia. Online retailing has hit badly the fortune of

9EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
the department along with discount stores. The online stores takes recourse to innovative
business models that helps them in lowering the overhead cost which can enable them in
making profits. The department stores should make use of platforms that can put the
customers in control that can help them in staying relevant in the market. The unification of
virtual space along with the physical experience of shopping can provide better service for
customers.

10EVOLUTION OF RETAIL SECTOR IN AUSTRALIA
References:
Abc.net.au (2018). If history is any guide, Myer and David Jones' struggles will continue.
[online] ABC News. Available at: http://www.abc.net.au/news/2017-10-30/department-
stores-history-suggests-retailers-will-struggle/9099876 [Accessed 27 Aug. 2018].
Acahuch.msd.unimelb.edu.au (2018). A New Town is Born: The Evolution of Australian
Retail Merchandising in the 1950s and 1960s : Australian Centre for Architectural History,
Urban and Cultural Heritage. [online] Australian Centre for Architectural History, Urban
and Cultural Heritage. Available at: https://acahuch.msd.unimelb.edu.au/news-events/a-new-
town-is-born [Accessed 27 Aug. 2018].
Bailey, M., 2016. Marketing to the Big Middle: establishing Australian discount department
stores. Journal of Historical Research in Marketing, 8(3), pp.416-433.
Bailey, M., 2017. Absorptive Capacity, International Business Knowledge Transfer, and
Local Adaptation: Establishing Discount Department Stores in Australia. Australian
Economic History Review, 57(2), pp.194-216.
Brimblecombe, J., Ferguson, M., Chatfield, M.D., Liberato, S.C., Gunther, A., Ball, K.,
Moodie, M., Miles, E., Magnus, A., Mhurchu, C.N. and Leach, A.J., 2017. Effect of a price
discount and consumer education strategy on food and beverage purchases in remote
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Cox, N., 2016. The complete tradesman: a study of retailing, 1550–1820. Routledge.
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sector? - Digital Pulse. [online] Digital Pulse. Available at:

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[Accessed 27 Aug. 2018].
Pursuit.unimelb.edu.au (2018). When department stores were more than just stores. [online]
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