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The Retail Doctor: Myer, DJs merger inevitable

A relationship between Myer and David Jones – whether in the form of merger or acquisition deal – is inevitable, according to The Retail Doctor, Group CEO Brian Walker.

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Walker’s statement is in response to comments made by former Myer CEO, Bernie Brookes, calling on the two department stores to ink a merger deal, in an exclusive interview with The Australian earlier this week.

Brookes pushed for a merger five years ago while heading up Myer, but the then-owners of David Jones rejected the proposal. Walker has also been forecasting this and agreeing in favour of a merger for the past five years.

“Globally, department stores are hurting. We’ve seen this from the chapter 11 bankruptcy of Sears and a wave of store closures from JCPenney, amongst others,” Walker told RetailBiz.

“In Australia, we’ve seen the rise of globalisation with the arrival of Zara, Uniqlo, Sephora and others, who have taken a chunk out of department store sales.”

Walker believes Myer and David Jones are struggling to make a profit and increase sales due to relatively expensive business models and very high overheads.

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“Consumers are shopping and researching products differently to what they were 5 or 10 years ago. The broader retail landscape has changed dramatically.”

Although they are both iconic brands, the department stores are sailing against strong headwinds.

“The department store model of some exclusive, unique, high-end product can only be justified for tourist markets, CBD markets and premium upmarket areas, so consolidation is imperative – shrinking stores and closing unprofitable stores and concentrating on destination centres and online sales instead.”

In addition to impacting one another’s business model, a merger or acquisition deal will have an impact on some consumers, but it will be a win-win outcome, especially for shareholders, who aren’t getting “any great joy” from either company, Walker concluded.

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