David Jones is shrinking its gourmet food business, closing three food stores in Victoria to stem losses that blew out to $12 million in the December half.
David Jones said on Monday it would close its Bourke Street food hall in Melbourne’s CBD next month and close its stand-alone Capitol Grand and its Malvern Central food stores in April and May.
However, it will invest more in the Elizabeth Street and Bondi Junction food halls and focus more on selling packaged gourmet groceries online.
David Jones is shrinking its gourmet food business, closing three food stores in Victoria to stem losses that blew out to $12 million in the December half.
David Jones said on Monday it would close its Bourke Street food hall in Melbourne’s CBD next month and close its stand-alone Capitol Grand and its Malvern Central food stores in April and May.
However, it will invest more in the Elizabeth Street and Bondi Junction food halls and focus more on selling packaged gourmet groceries online.
The food business has been losing money for several years, but losses blew out to $12 million in the December half, partly due to the drop in foot traffic at CBD stores in Sydney and Melbourne during the pandemic.
Mr Fyfe said the simplified food offering would set up the food business for a sustainable and successful future.
“A recent review of our food business has helped us identify a number of structural changes we need to make to ensure the ongoing success and profitability of this offering,” Mr Fyfe said.
“Above all, we are committed to the ongoing delivery of the most iconic elements of our food offering both instore and online.”
The decision to scale back the food business comes as yet another blow to South African retailer Woolworths, which identified food as a major growth opportunity soon after it acquired David Jones for $2.1 billion in 2014.
Former Woolworths CEO Ian Moir spotted a gap in the $70 billion retail food and $27 billion food service markets and in 2017 unveiled plans to spend at least $100 million over three years building a world-class retail food business aimed at differentiating David Jones from rivals, protecting it from pure-play online retailers and creating a ‘halo effect’ by using food to encourage shoppers to linger longer in stores.
Under a three-pronged strategy, David Jones planned to open half a dozen 1700-square-metre to 2500-square-metre food halls in flagship CBD stores, 500-square-metre to 800-square-metre food halls in suburban and regional stores, and 300-square-metre to 500-square-metre stand-alone stores in high-density locations.
The first flagship food hall opened in Bondi Junction in Sydney in 2017, the second in David Jones’ Wollongong store later that year (it has since been closed) and the third in Malvern in Melbourne in 2018.
The building in which the Bourke Street food hall currently operates was sold last year and David Jones will exit the building in August 2022, moving menswear to its Bourke Street womenswear and beauty store.
David Jones will introduce a new food offering as part of the refurbishment of the womenswear store, including premium dry groceries, gifting products and instore food service options, but it will no longer sell fresh foods.
In the interim, David Jones’ existing “premium pantry” and gifting ranges will move to a temporary location in the womenswear building.
David Jones said it would attempt to find new roles for food store staff in other parts of the business.
Extracted from AFR