Editorial / Hot Topics / Multichannel

Price Harmonisation Addresses an Unbalanced Retail Market

David Jones's price harmonisation

David Jones’s latest announcement could herald significant change in Australia’s retail industry, with price harmonisation representing an initial step.

‘Price harmonisation’ is what the retailers call it, while some consumers may see it instead as ‘anti-price gouging’ or ‘fair pricing’.

Whatever you call David Jones’s recent decision to lower prices of all products in the last few weeks (some by as much as 50 percent) can be seen as another positive for e-commerce.

“What?” I hear you say, “this is a positive for e-commerce?”

Let me explain: Paul Zahra, CEO of David Jones (who has had  a good few weeks recently in my opinion), has called for this price move in order to attract more foot traffic into stores for the lead up to Christmas, while also snagging a few more sales via the brand’s much-improved website offering. Zahra stated that this price harmonization was the result of looking at overseas competitors and their prices, before convincing his suppliers to lower their prices.

The internet has opened markets and purchasing choices, while also highlighting to consumers how cheap items are overseas. This has been eye-opening for many retailers, who then push back on their respective wholesalers, suppliers and importers.

It is this borderless market that forces not only consumers to re-think the way they shop, but it also forces suppliers to reconsider their own margins. It’s little wonder that David Jones are going back to the coal face of product sourcing and saying “What about me?”

The typical supply chain in Australian retail has plenty of people looking to have their ticket clipped along the way, however we’re quickly seeing the additional layers built into our pricing structures is unsupportable. David Jones is  a high-end luxury brand, yet even this organisation has been forced to reassess every level of its business in order to solidify its position in a world of shopping without borders.

So, getting back to why this is good for e-commerce; as suppliers return to the source of their products to petition for better prices to present to retailers (and, ultimately, consumers), it reveals another benefit of the internet and e-commerce – change flows in both directions. For too long we have heard complaining from large retailers about ‘unfair playing fields’, but its possibly more accurate to see the core of their complaints as actually addressing their sudden lack of control.

Borderless shopping is also multidirectional on another level that retailers would do well to keep in mind. These traditional stalwarts like Myer and David Jones have been so intimidated by offshore competition that they’ve failed to capitalise on their own ability to compete in foreign markets. For years their growth and dominance of our local market has slipped, while agile online concepts like SurfStitch and Lorna Jane have gone on to take on the world. Hopefully not to late to the party, Zahra has some good news on this point.

“We are increasingly competing in the international arena and this has meant that it is important that we do everything possible to protect our customer value proposition and to ensure that the international brands our customers love are accessible at David Jones,” he said in a statement.

One might question why it took so long – we will never know the true reason, but I imagine that a combination of a traditionalist’s mindset when it comes to online, pouring fuel into ARA GST attack machine and the time it takes to rattle supply cages all played their part.

Its good news for consumers and e-commerce as this new way of thinking is what the industry needs as a whole – wouldn’t you agree?

2 Comments

  • Having recently been shopping in DJ’s Sydney I can’t say that I saw any indication that they have a new pricing policy. If I was cynical I would say that it sounds like great media and PR hype timed just before the holiday buying season.

    In terms of game changing I doubt it will have any real effect. DJ’s and Myers solution to their problems is to bring back customer service.

    Passing pricing pressures up the chain to suppliers has to have a ripple effect as I can’t see the supplier wearing margin loss. How does a SMB go about applying the same kind of pressure? Answer: they can’t.

    So if you believe that DJ’s are slashing prices and margins across the board as some global pricing policy change then the tooth fairy must be real.

    Reply
  • I haven’t been in a DJ’s store for ages – so you might be right that it is all good spin and PR rather than any substance. What i especially liked was that the rhetoric has changed – moving to what can be changed and what they can control.

    Reply

Leave a Reply

  • (Required)

  • (Required but will not be published)

Power Retail Ecommerce Resources