David Jones’ survival plan – five reasons it might not work

David Jones has finally taken the plunge into online retailing, announcing a detailed report on how the company will become a digital powerhouse, following the example of successful online department stores in the United States.

In a 13-page document, chief executive Paul Zahra lays out a plan to transform into a company that lets users buy no matter what platform they choose.

The company’s goals are admirable – sacrificing profit in order to add hundreds of new staff, pumping more money into a POS system update, along with more IT capabilities, introducing a mobile app, social commerce site and updating the products on its website from 9000 to 90,000.

These are all worthy goals, but they all have drawbacks. A plan like this always faces obstacles, and some of these goals may not even be the best decision.

Here are five reasons we think David Jones’ plan to transform for online retail may not go as smoothly as Zahra believes.

The plan takes far too long

In the company’s statement, Zahra said an extension of the web store would be added in the second quarter of the 2013 year, adding extra functionalities such as reviews and ratings.

These should have been part of the company’s online store five years ago.

It’s impressive that David Jones is putting millions into this and sacrificing profit in order to do so, but waiting until the end of the year to put reviews on the site is almost laughable. Some of these features can, and should, be implemented immediately.

Mobile applications can easily disappoint

Releasing a mobile application is great, and it’s something more department stores should be doing, but David Jones needs to be aware that it can’t just slap a skin on its native mobile website and then call it an “app”.

If the company is going to make an app, then it needs to put a significant amount of investment into making it work. The app needs to give the consumer something they can’t get from the mobile store – and it all needs to be lightning fast.

Technology roll-outs always break

Myer upgraded its POS systems a while back, so it’s good to see David Jones is doing the same. But there’s a lot to take into account when introducing this type of system.

For one thing, new technology roll-outs always have problems. Some are so serious they’ve forced smaller companies into administration. David Jones had better be prepared for a long, and arduous, technology roll-out.

Are 300 new staff members really an answer?

David Jones definitely has a problem here, which Zahra acknowledges – what do you do when customers are more knowledgeable about your products than the staff? It reduces your employees to a cursory role, as they just stand there and put the product through a register.

Introducing more supervising staff is a good idea, but this push for 300 new employees averages out to about six per store. That’s not a whole lot and, with retailers continually complaining about labour costs, it’s going to get much more expensive.

This is a good idea, but it needs to be implemented well, and David Jones needs to make sure these extra staff can actually prove their worth in higher profits.

Flooding your online store won’t guarantee success

Adding thousands of products to your line-up is always a great start, and it’s true that online shoppers value range as much as anything else, but David Jones needs to understand that simply adding a bunch of new products isn’t going to get people to buy.

It’s the experience they want. The entire process of getting onto the site, browsing, picking and searching for products should be completely seamless: Anything less and they’ll just go somewhere else.

Having 90,000 products is fantastic, but customers need to be able to find them. Here’s hoping the company spends time investing resources in search technology and the functionality of the site itself.