David Jones-BP food partnership to end

The up-market department store has taken another step to slim down its business, announcing it will exit 35 smaller locations only opened in the last two years.

Up-market department store David Jones has taken another step in the downsizing of its food business.

On Friday, the firm announced it would be ending its partnership with fuel retailer BP which had seen 35 petrol stations in Sydney and Melbourne kitted out as mini David Jones food halls.

That comes just months after the department store said it would close its two stand-alone Melbourne food stores.

That leaves David Jones with a food offering at just its Sydney CBD flagship store and nearby Bondi Junction.

“That may not be viable and they may decide to exit the food category completely,” a retail analyst told news.com.au. The company has insisted it will continue to sell food.

Rebecca Judd in the new BP and David Jones first store collaboration in Bayside, Melbourne.

BP and David Jones partnership to be ‘market leading’

BP and David Jones announced in August 2019 that up to 350 food items from the retailer – including ready meals, sandwiches and biscuits – would be sold at initially 10 petrol stations.

It was hailed as a “market leading” food and convenience offer.

The company wheeled out model Rebecca Judd to pose close to the petrol pumps at the first location in Bayside, Melbourne.

“The launch of this partnership marks an exciting new chapter for David Jones Food,” said Pieter De Wet, managing director of David Jones’ food arm.

“This product range combines innovation with freshness and taste to deliver an offering that is both convenient and of the highest quality.”

The company had hoped it would be a lucrative side business to the main department stores.

And it seemed so, for a while. In July 2020 the pair announced a further 20-plus conversions in suburbs including Mosman, Ashfield and Willoughby in Sydney and Epping, Eltham and Kingsway in Melbourne.

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David Jones’ BP partnership expanded to 35 locations. Picture: Supplied

But on Friday, the two firms said the experiment was over.

Trade publication Convenience and Impulse Retailing broke the news that the BP locations would be shorn of their David Jones branding and food offer.

In a statement, David Jones referred to the locations as a “pilot”.

The firm said the axing of the stores was due to a “strategic review of the food business to focus exclusively on bespoke food hall experiences at our (Sydney CBD) Elizabeth Street and Bondi Junction locations”.

“All 35 existing dual-branded David Jones-BP locations will transition to a new-look BP convenience offer.”

BP said it “remained committed to delivering the best possible experience for our customers and will continue to actively pursue our strategy of transforming retail convenience and putting customers at the heart of everything we do.”

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The BP sites sold ready meals alongside David Jones’ up-market pantry staples. Picture: Supplied

David Jones’ food struggles

The company is making money. In February, it reported a 33 per cent rise in profit in the first half to $56 million.

But David Jones has struggled to expand its food offering beyond its flagship stores in Sydney and Melbourne.

A plan to open stand-alone David Jones Food stores in ritzy suburbs has also come to a shuddering halt.

In March, the company announced the only two stores, in South Yarra close to Melbourne’s CBD and Malvern in the south east, would close by May. As would the food hall in the CBD Bourke Street store until a refurbishment was completed in 2022.

Petrol station offshoots of fancy grocers work abroad. UK retailer Marks and Spencer has almost 250 mini-stores at BP service stations in Britain.

DJs’ owner, South Africa’s Woolworths (no relation to Australia’s Woolworths) has scores of supermarkets at petrol stations.

The company said its food halls in Sydney’s CBD and Bondi will remain. Picture: NCA NewsWire/Damian Shaw

Great strategy, bad execution

QUT marketing expert Associate Professor Gary Mortimer told news.com.au it must have seemed like a “really smart strategy” in Australia.

The sites were mostly located in main thoroughfares leading from the CBD towards well-to-do suburbs.

“It was a great strategy but putting it into service stations detracted from the experience,” he said.

“The execution fell over. Yes it was a great product but it wasn’t DJs staff selling it.

“It was the BP guy behind the counter, so the experience was different from going into a food hall.”

Prof Mortimer added that supermarkets in South Africa and the UK were more stratified by class than in Australia. Here, consumers were happy to shop for most items at Coles, Woolies or Aldi and so had less need to swerve into a BP David Jones.

The stores sold fresh food under the David Jones brand. Picture: Josie Hayden

DJs insists it will remain in food

The retreat from BP stations and stand-alone supermarkets leaves David Jones with a far smaller food business.

“Maybe having two food store flagships is about as good as it’s going get for David Jones?” Prof Mortimer said.

“That may not be viable and they may decide to exit the food category completely at some point.”

However, David Jones has insisted food remains a priority.

“David Jones remains committed to delivering an exceptional food range reflective of our customers’ needs and preferences while reducing cost and enhancing overall business performance.”

Its Sydney CBD and Bondi Junction food halls will be “world class”, it added.

The company said it would also focus on “premium pantry and seasonal gifting ranges instore and online”.