Australia's iconic department stores are facing an existential crisis.
With online retailing and COVID lockdowns impacting reshaping how people shop, Myer (originally Grace Bros in Sydney, founded in 1885) and David Jones (founded in 1838) have been edging towards what feels like the brink of extinction for years.
In recent months, Myer has announced the closure of its flagship suburban store in Roselands and suppliers are coming in droves to collect late payments from David Jones . The retailer's most recent published accounts, from 2024, show a $74.4million loss.
It begs the question – is this the end of luxury department stores?
Probably not, says one of Australia's leading retail historians, Associate Professor Dr Matthew Bailey.
He says department stores have been facing existential crises since the 1970s and have repeatedly found ways to adapt.
The ground floor at David Jones Elizabeth St Sydney in the 1960s.
"One of the things that gets missed in the coverage of department stores is that their challenges go back a long time," says Dr Bailey.
"It's not that department stores can't exist, but historically they pivoted from positions of strength. Now they're pivoting from a relatively weaker position in an intensely competitive environment."
The pay problem
David Jones and Myer/Grace Bros have occupied prime real estate and top billing in the minds of consumers in Australia's capital cities for almost 150 years. But their dominance began to falter in the 1970s.
The introduction of equal pay laws in 1969 marked a turning point for department stores, who relied on mostly female labour.
"The cost of employment labour began fundamentally reshaping the department store model about 50 years ago," says Dr Bailey, whose recent research examines the gendered history of retail .
"They employed large numbers of women, and for a big part of the 20th century those women were paid around 54 per cent of the male wage.
"Emotional and aesthetic labour was a real skill set, but it wasn't factored into wages. There were detailed guidelines on appearance, how to approach customers, how to greet them, and how to be courteous, along with strong product knowledge. These were highly skilled jobs."
David Jones and Grace Bros in Sydney in the 1900s. Pictures: City of Sydney Archive
Once stores were required to pay women equally, the highly trained workforce that underpinned their service model began to change.
Staff were increasingly casualised, and a model built on relationships, quality and care became harder to sustain financially.
"At the same time, new competition enters the sector," says Dr Bailey.
"Specialty stores become more widespread and professionalised, and discount department stores were introduced. Think Kmart, Target and Big W. Kmart arrives in 1969, and these formats expand through the 1970s and 1980s.
"When competitors sell similar goods much cheaper, department stores either reduce prices or protect margins by cutting labour. That is the beginning of a long change."
Dealing with suburban sprawl
At the same time, populations in cities such as Sydney and Melbourne began moving further away from the CBD.
Roselands shopping centre in Sydney's south-west was one of the first examples of department stores adapting to this shift.
Built by Grace Bros in 1965, the centre was anchored by a large multi-level department store.
Roselands was billed as a shopping-community centre.
"Grace Bros and David Jones were the biggest brands, and they adapted," says Dr Bailey.
"They built shopping centres in the two biggest cities and they expanded further by acquiring other stores.
"One of the department store's key innovations was being a one-stop-shop. From the 1920s through to the 1960s, you could buy almost anything for the home (from lawnmowers and beds to fashion) all under one roof. But that function is now largely performed by the shopping centre, in a more efficient way."
The food hall at David Jones in 1936 – it quickly became an important part of the store's business model.
A sign of the times
Department stores once relied on large, stable workforces and long-term careers. Today they are leaner, more casualised and far less connected to community life.
"In the early 20th century, department stores were major employers of women and offered valued jobs," says Dr Bailey.
"These stores employed thousands and were described as 'families'. That doesn't mean they were perfect workplaces, but there was a strong social world around the job that largely no longer exists.
"Stores sponsored theatre groups and choirs, charity organisations, tea rooms, end-of-year balls, parties and sporting teams. The workplace was integrated into community life."
Target's introduction into Australia was a turning point. Picture: The National Archives
That world has largely disappeared.
Shopping is now faster, more individual and increasingly online. The relationship-driven service model that once defined department stores has been replaced by a focus on efficiency.
"They'll probably be around for a while," says Dr Bailey. "But we can see them shrinking in store numbers and floor space."
And they already have, with the Australian Financial Review recently reporting David Jones has reduced floor space in Bondi Junction and Burwood in Sydney and Southland in Melbourne.
While their disappearance may feel inevitable, department stores are unlikely to vanish completely. But they are no longer the social and economic anchors they once were.
