David Jones’ HQ move gives Melbourne bragging rights

Melbourne will claim to be the nation’s fashion capital after luring the HQ of Sydney’s David Jones store to Victoria.

The sale of David Jones’ Market Street store is progressing well.

Melbourne will lay claim to being the nation’s fashion capital after luring the headquarters of Sydney’s venerable David Jones department store to Victoria.

The move by David Jones’ owner, South African retailer Woolworths Holdings, means both the 178-year store and its key rival Myer will have their head offices in Melbourne.

David Jones, established in Sydney by Welsh-born immigrant David Jones only 50 years after the founding of the new colony, will move its headquarters from its flagship Sydney store in Market Street and Elizabeth Street to Melbourne’s inner-city suburb of Richmond.

It gives Melbourne massive crowing rights over Sydney. Melbourne already considers itself the home of style and sophistication in Australia, especially when it comes to fashion, thanks to the Melbourne Fashion Festival and Spring Racing Carnival which has grown to be one of the most important fashion events on the calendar.

The move by David Jones, for so long a part of Sydney city culture, is also likely to spark new friction between the two state governments over poaching businesses and head offices.

Woolworths Holdings, which bought David Jones two years ago for $2.1 billion, was offered incentives by the Victorian government to walk away from Sydney and set up in Melbourne.

Victorian Premier Daniel Andrews said: “This is testament to Victoria’s position as the nation’s fashion capital and one of the best places in the world to do business.

“We are fighting for every single job and bringing in major investments like this one, which will secure 1500 jobs for Victoria and help keep our economy strong.”

As part of the move David Jones will also share a single Australian head office with fashion label Country Road, which is also owned by Woolworths Holdings.

With the sale of its Market Street, Sydney CBD, property progressing well, Woolworths Holdings has declared its intent to spend up to $200 million on the redevelopment of the iconic Elizabeth Street store. Woolworths Holdings will create a 39,000 sq/m luxury department store spanning 11 levels in the heart of Sydney’s retail precinct.

It will also bring together for the first time a unique combination of contemporary gourmet food, dining and luxury fashion under one roof, the company said today.

“The redevelopment of Elizabeth Street is an exciting milestone in the transformation of David Jones and will create a new benchmark in both Australian and global retail. David Jones Elizabeth Street will have the best of contemporary store design while embracing the heritage of our iconic Sydney CBD building.

“We will fully utilise the building’s many remarkable spaces and restore world class food and dining as a key element of the customer experience,” said Woolworths Holdings chief executive, Ian Moir.

The redevelopment of the Elizabeth Street store will commence in the second half of 2017 with completion expected in the second half of 2019. The redevelopment will occur in several co-ordinated phases with limited disruption to David Jones customers.

“This exercise is not about reducing headcount and saving employment costs. Not only will the current complement of David Jones staff remain the same, it will grow in future as the business expands,’’ Mr Moir said.

In addition, Woolworths Holdings expects that co-location will deliver synergies and productivity benefits of at least $10 million per annum from 2019. These will result from a reduction in property, procurement, off-site facility and travel costs and the consolidation of external services.

David Jones employees moving to Melbourne will be provided with a generous relocation package and full agency support. Following completion there will be approximately 600 David Jones employees and 680 Country Road Group employees at the Woolworths Holdings Australasian head office.

In time, with the continued growth of its business, Woolworths Holdings expects that its Australasian head office team will increase to 1500 employees.