While David Jones unveiled another year of decreasing financial returns last week, with the poor retail industry in Australia further weighing on the struggling department store, it also showed its hand at something more surprising – an entry into the $4.7 billion convenience retail sector through a partnership with BP. The expansion will see David Jones’ food vertical entering BP sites to create a high-end food-for-now and food-for-later offering with a particular bend towards fresh product
ucts.
According to David Jones Food managing director Pieter de Wet, the Australian fresh food market is still largely undeveloped compared with other regions – and isn’t necessarily servicing a growing customer demand for fresh, healthy, convenient food.
However, de Wet concedes that their biggest issue is competing with Australia’s major grocery players in terms of scale.
“You’ve got two very big supermarket retailers that are very good at what they do, and you’ve got Aldi that is world class at what they do. Scale is a real challenge,” de Wet told Inside Retail Weekly.
This is where BP comes in.
“We specifically partnered with BP for their positioning, but also their footprint – they’ve got over 1400 service stations in this market,” de Wet said.
“If we get these trial sites right, which we believe we will, the scope of that and of our own chain is a big opportunity.”
According to both de Wet and BP Australia vice-president of sales and marketing Brooke Miller, David Jones and BP share premium positions in the market, as well as a shared obsession for quality.
“We know the retail environment is changing; digital disruption is upon us, and traditional category lines are blurring. In addition, customer behaviour is changing. People are doing smaller grocery shops more often,” Miller told Inside Retail Weekly.
“We’re seeing a rise in pre-packaged and prepared meal options. The market is ripe for retailers to innovate.”
Old brand, new context
While David Jones has traded in food for a long time, it has always been in-store offerings within larger department stores. This new partnership allows its customers to interact with the brand outside of a traditional shopping centre environment – something that isn’t lost on de Wet.
“I think that’s a critical part of this,” de Wet said.
“It’s absolutely about getting our brand out there. I think it gives our brand a modern, accessible feel, which is really exciting. I think this is something new and fresh for our brand – it’s really interesting.”
The David Jones-branded BP sites will initially be rolled out in 10 hand-picked locations across Melbourne and Sydney, though both partners expect to take the lessons learned from these trials into a broader national roll-out.
Miller told Inside Retail Weekly the locations were chosen to ensure BP and David Jones can learn as much as they can during the trial.
“Listening to and acting on customer feedback will be absolutely key to this offer,” Miller said.
“We want to keep experimenting and developing the range before we look to scale up the offer at sites across Australia.”
Initially, David Jones will offer 350 items at the 10 locations, which are in both suburbs as well as major arterial roads, to further understand the different ways customers will interact with the experience in various environments.
“I think it’s going to be interesting to see how the different locations perform. It’s not only where you are [located], but it’s also where [the customer] is on their way to,” de Wet said.
“[Once] people realise they don’t have to go to a shopping centre or a big supermarket to get dinner for tonight, and can just grab it on the way home, that will be a big shift.”