Established in 1838 by Welsh merchant David Jones, the now iconic department storeis the oldest trading department store in Australian history.1Originally established tosell coveted products to the gentry, the business continues with

Established in 1838 by Welsh merchant David Jones, the now iconic department store
is the oldest trading department store in Australian history.1
Originally established to
sell coveted products to the gentry, the business continues with the same mantra today
as it did 174 years ago. However, the retail environment is starkly different to the days
of colonial Sydney, as we enter the touch generation age where participating in retail
therapy goes beyond the doors of the shop front, now to be dominated by the fi ngers of
our constantly monitored smartphones. This case study reviews the recent troubles of
David Jones, including its criticised company culture under Mark McInnes, its desire to
emulate Nordstrom’s online retail success and its new strategy and positioning of its retail
activities to reaffi rm its importance in the Australian consumer arena.
DaviD Jones, changing forTunes
2010 was not a good year for David Jones. The sexual harassment case against former
CEO Mark McInnes greatly damaged its reputation. An out-of-court settlement put an
end to the case, but the process revealed an unhealthy culture of corporate arrogance
within the business which has tarnished David Jones ever since. The fortunes of this
iconic department store have continued to fall. Further, it has found itself in the midst of
a global retail attack where it is simply not competing with other retail shop fronts within
its physical environment. There is also additional competition from global online retailers
shipping product to Australian shores.
Before his fall from grace, Mark McInnes’ tenure saw strong profi t growth of 42% with
net profi t after tax growing from $109.5 million in 2007–08 to $156.5 million in 2009–10.2
During this period the share price of David Jones also rose from the $2 mark to an average
of $5 by 2010. The continuing growth slowed to $101.1 million net profi t after tax for
2011–12.3
Paul Zahra became CEO in 2010. Not only did Zahra have to clean up the publicity
mess left after McInnes’ shock departure, but he had to guide the retailer through the
touch age, where the new becomes old within a matter of months. The son of Maltese
immigrants based in Melbourne, Zahra has 29 years of retail experience and the full
confi dence of the David Jones board to execute a strategy to get the retailer online and
onto mobile devices.
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