Australian Retail Is Challenged, But There Are At Least Two Good Jobs Going

Paul Zahra and Megan Gale attend the David Jones 175 year celebration at David Jones on May 23, 2013 in Sydney, Australia.

The run up to Christmas could be a bonanza if you’ve got refined skills in the retail sector.

There are two top jobs going, one at Myer and one at David Jones. Granted these are only two jobs and the economy needs thousands but these are of a very rewarding nature.

Expect competition between the two retailers to get the right person for CEO. Those with the skills and experience could do well if they can convince one company that the other is after them.

The news from David Jones that CEO Paul Zahra will be resigning came with the important Christmas trading period a few weeks away. Myer is also looking for a replacement for Bernie Brooks who’s due to leave next year.

This used to be the one guaranteed time of the year when retailers could look forecast to an avalanche of sales as consumers dropped wallet caution to ensure a merry Christmas.

Now, however, there are fears that consumers have ingrained wallet caution and that they will keep a tight hold on Christmas buying.

Deutsche Bank, in a note to customers, says David Jones has demonstrated some progress in its efforts to address the structural challenges of the business.

“However, sales have continued to decline and industry feedback suggests that David Jones’ execution is inferior to that of Myer.”

Deutsche Bank says the fact that Paul Zahra will remain in his role until his successor is appointed provides evidence that this development was his decision.

“While this suggests there is nothing more sinister behind today’s announcement, his resignation does not signal that the group’s performance is about to improve. The transition arrangements will lessen the disruption during the CEO search but this news will cause some distraction.”

Zahra, who is to stay in the role while David Jones looks for a replacement, had given every indication that he was a stayer.

Just five weeks ago, he said, in an interview with The Australian’s Deal magazine: “Once I feel I have achieved everything I have set out to achieve, it will be time for me to move on and give somebody else an opportunity.”

David Jones, and the rest of the retail sector, have been hit by the consumer confidence sapping Global Financial Crisis and increasing competition from online retailers.

Sales are down and appear likely to continue to be suppressed. In its annual results announced last month, David Jones notes that consumer sentiment was subdued and that it faced aggressive discounting.

Sales were down 1.2 per cent and after tax profit $95.2 million, down from $101.1 million. Taking into account the departure of the Dick Smith Business, the result was about flat.

The change in government federally did have a confidence factor but some business leaders are reported a small or nil impact from the installation of a Coalition government.

Online business Wotif, which sells about 10 per cent of all hotel bookings in Australia, says: “We have not seen any accommodation uplift post the federal election. Any uplift in consumer confidence is yet to translate into sales.”

Traditional retailers including David Jones have started to move online world but they are still behind pureplay online retailers who control around 70 per cent of the online market.

And in the department store sector, where David Jones sits, online retailers hold a firmer grip with 95 per cent of the business, according to NAB Group Chief Economist Alan Oster.

Online retail is estimated at more than $14 billion in Australia, according to the NAB’s Online Retail Sales Index. But that’s still only equivalent to 6.3 per cent of traditional bricks and mortar retail spending.