Melbourne hardest hit by David Jones plan to scale-back food stores

Melbourne will bear the brunt of David Jones’ plan to scale back its struggling food store business.

the David Jones Food Hall concept has struggled outside the retailer’s home market of Sydney. `

Melbourne will be hit hardest David Jones’ decision to close some of the premium food stores it launched only a few years ago, the company’s South African owners have revealed.

Other food stores will be scaled back in size, with a shift to an better offer online to stem the tens of millions of dollars in losses flowing from the venture.

Roy Bagattini, the recently appointed chief executive of South Africa’s Woolworths Holdings, the owner of David Jones, carried through on a promise to address the losses being racked up by the David Jones Food Hall concept with changes announced on Monday.

David Jones will close down two stand-alone food stores in Melbourne – Capitol Grand, in South Yarra and one in Malvern Central, south east of the city – in April and May respectively.

And following a dive in foot traffic in the Melbourne CBD due to COVID-19 David Jones will bring forward the previously announced closure of the Bourke Street food hall to next month, ahead of the retailer’s exit from the building in August 2022. A new food offering is scheduled to be opened in the Bourke Street womenswear store next year.

The new Bourke Street food store will be introduced next year as part of the refurbishment of the retailer’s Bourke Street womenswear store.

David Jones declined to provided the number of jobs involved in the closures, but the department store operator said it was looking to redeploy staff where possible.

But the restructure of David Jones food business will not derail the convenience partnership with petrol station chain BP, which will continue across 35 locations.

The wider David Jones Food Hall has concept has struggled since it launched, losing $12 million in the recent half and $14m in losses in 2020.

At David Jones’ first-half results presentation last week, Mr Bagattini repeated his focus on fixing the food business and acting to reduce its losses, which dragged on the profitability of the wider David Jones retail business.

David Jones is dumping its Food Hall concept in Malvern and South yarra in Melbourne. Picture: Supplied

David Jones said on Monday that it would streamline its food offering in the next phase of its strategy to create a future-fit store portfolio and enhanced online business.

The David Jones push into premium food stores was always viewed with some scepticism by the retail and investment community. A similar push made decades ago ended in failure and was ultimately shut down.

David Jones said a new-look food business will extend to both in-store and online channels, with a continuing focus on quality.

David Jones’ food halls at Elizabeth Street in Sydney’s CBD and Bondi Junction will continue, but will featuring a selection of concession partners on the floorspace.

David Jones chief executive Scott 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. We look forward to continuing to share our much-loved David Jones food range with customers across Australia and New Zealand, and to delivering a world-class instore experience at our Elizabeth Street and Bondi Junction Food Halls.”

David Jones said it is committed to supporting all team members impacted by these changes, with a focus on redeploying team members to other roles across the David Jones business.

Originally published as Melbourne hardest hit by David Jones plan to scale-back food stores