Myer kicks off price war with massive sales
DEPARTMENT stores Myer and David Jones have simultaneously kickstarted their massive winter sales and in a battle for reluctant shoppers, they're promising millions of dollars in savings.
In a struggling market for the grand dames of Australian retailing, Myer has blinked first in a "discount war". But you'd be forgiven for thinking the opposite, with 70 per cent off sales signs being hoisted on the shop floor and the sale being the second in as many weeks at the store.
David Jones also kicked off its mid-season sale on Tuesday and said, among other items, it expected to sell 200,000 socks and jocks over the coming weeks.
But one retail analyst said the early trigger on the sales was a risky move because it meant shoppers were now "unwilling to pay full price for anything as they know it will be discounted next week".
Myer went live with its sale on Tuesday morning, several days ahead of June 1, when the sale began last year, The Australian reported. The retailer said the sale was in the "same week" as last year.
It's expecting big crowds for the first two days of the stocktake event, where even further savings are promised.
"We have two major sales a year, one on Boxing Day and this is the biggest mid-year event across stores," Myer executive general manager of stores and experience Tony Sutton said.
"We'll have hundreds of thousands of customers in our stores this week making millions of dollars of genuine savings across the whole store, so you know you'll be able to find sale items in every department."
He highlighted deep discounts on Circulon cookware, 30 per cent off all lingerie, 40 per cent off men's suits and savings on brands such as Marcs, Basque and Piper. With winter imminent, bed linen was a favourite purchase, Mr Sutton said.
Not to be outdone, David Jones has also pressed the go button on its sale, or "half-yearly clearance" in DJs speak.
Up to 50 per cent off will be found on a range of fashion, shoes, accessories, homewares and manchester including brands such as Jac+Jack, Tigerlily, Sheridan, Breville and Nespresso.
The Sydney-founded store, which is celebrating its 180th anniversary, said it expected to sell 10,000 coats, 34,000 pairs of jeans and 200,000 men's socks and underwear.
"We expect to welcome more than two million customers into stores nationwide and over three-and-a-half million visitors to our website throughout the half-yearly clearance," managing director of clothing and general merchandise David Collins said.
But for Myer shoppers, at least, the sale might seem familiar. Only two weeks ago the retailer was discounting some of the exact same items during its Click Frenzy sale event.
Professor Gary Mortimer, a retail guru at Queensland University of Technology, told news.com.au Myer was in sale overdrive.
"Retailers are guilty of creating a price-conscious consumer who is unwilling to pay full price for anything as they know it will be discounted next week.
"When you move into deep discounting it becomes a very quick downward spiral and it's hard to pull out of that. If you mark down items you have to sell twice as much."
Department stores had already warned the warm start to autumn had dented sales of winter clothing.
Prof Mortimer said Myer was "sitting on great deal of inventory" they had to shift.
In March, Myer announced a loss of almost half a billion dollars for the first half of the financial year, a negative 858 per cent change on the same period last year.
"I have renewed the entire team's focus on products, price and customer service," he said pointing out Myer had failed to match rivals' pre-Christmas sales.
However, just last week Mr Hounsell denied the store was engaging in "extreme discounting," a charge levelled by recalcitrant major shareholder Premier Investments, the company behind Just Jeans and Smiggle.
After booting out its former chief executive earlier in the year, new head honcho John King, from the UK, will pull up to the Melbourne HQ next week now his visa has cleared.
Mr Sutton said Myer had rolled out its sale in "the same week" as last year.
They weren't sitting on huge piles of unsold clothing, either, he insisted.
"We have pretty sophisticated systems when it comes to inventory, so that's not a problem."
Nonetheless, the Myer store head said the competition was cutthroat. "We will remain competitive with the marketplace, and we do look at what's happening, but we're not getting into a discount war."
In February, DJ's owner, South Africa's Woolworths Holdings, not related to Australia's Woolworths Limited, announced sales at the department store had slumped 3.3 per cent in the half year.
But in the three months running up to Christmas, gross profit margin had edged up to 40.7 per cent, precisely by doing fewer discounts.
DJs told news.com.au they always started their mid-year sales on a Tuesday and the fact its clearance kicked off on the same day as Myer was mere coincidence.