Debenhams' smaller format offers a glimpse into future Australian department stores

Retailer Pepkor’s first Australian Debenhams store in Melbourne, which opens next week, gives a peek into what a department store may look like in the future.

The store is a small in size and stock from a typical Myer or David Jones store, but expects to offer a curated range of brands chosen with the Australian shopper in mind.

Debenhams is a British multinational retailer which operates under a department store format. UK retailer Debenhams has identified Australia as a strategic priority and aims to triple online sales in its first year operating in Australia.

Pepkor south-east Asia's department stores managing director Graham Dean told The Australian Financial Review that the new format was the way forward for the department store sector, which is facing increasing competition from online stores and global bricks-and-mortar retail chains.

The official opening is on October 24.

"We have basically come up with the concept for this market because we believe the future of a department store isn't to trade in a 10,000 square metre space over multi levels," said Dean, a former Myer executive who also runs Pepkor's Harris Scarfe department stores.

He added that the modern fashion and beauty customer is time poor and would like the retailer to do the curating and come up with the “best possible range."

The smaller format will generate higher sales per square metre than a traditional department store but staff ratios will be higher and they will be trained to work across all categories and brands.

The Debenhams store is the anchor tenant in JPMorgan's refurbished St Collins Lane retail centre in Collins Street and occupies the ground and lower ground floors. It will span 3,600 sqm. 

The range of 30,000 SKUs includes international cosmetics brands and exclusive women's, men's and homewares brands from Debenhams, including the Duchess of Cambridge's favourite designer Jenny Packham, Siren by Giles Deacon, Butterfly by Mathew Williamson, Henry Holland, J by Jasper Conran, Hammond and Co and Racing Green.

The four-level mall has struggled to find tenants to occupy shops on upper floors so far, but Dean said the site was selected to take advantage of the "ant track" from Flinders Street to Melbourne Central, which attracts about 17,500 people a day.

“We are not a traditional department store and that is the key,’’ Mr Dean told The Australian.

“We are small format. Myer would be around 10,000sq m in average size; we are 3600sq m and we will never go above 4500sq m in any of the stores we open, so we are not trying to compete in a traditional department store sense.

“Therefore we don’t feel we are subject to the same pressures a Myer or David Jones have. We don’t have kidswear; we aren’t trying to sell toys; we won’t sell LED TVs in a market where you have a JB Hi-Fi better at it, or iPads or any of those items. We are in the beauty business, the fashion business and it is curated to fit the space we occupy.’’

Pepkor has links into the Australian retail market. Global retailer Steinhoff International bought Pepkor three years ago for $6.7 billion, and it owns a large portfolio of retailers in Australia, including Best & Less, Harris Scarfe, bedding chain Snooze and furniture retailers Fantastic, Plush and Freedom Group. Mr Dean said the Australian retail market had always been competitive, but there was a place for an operator like Debenhams, which aims to open 10 stores here.

Meanwhile Myer and David Jones are shrinking stores to improve productivity and opening smaller-format stores.

But with 15 and 20-year leases it will take time to significantly change their networks, observers noted.

In spite of the luxury brands, Debenhams intends to keep prices more in keeping with private labels at Myer, ranging from $99 for women's jackets to $399 for sequinned evening dresses.

"We're elevating the environment and service levels but not the pricing," said Dean. "It's got to be good value for money."

The four-level mall has struggled to find tenants to occupy shops on upper floors, but Mr Dean said the site was carefully chosen to take advantage of the "ant track" from Flinders Street to Melbourne Central, which attracts about 17,500 people a day.

The range of 30,000 SKUs includes premium international cosmetics brands and exclusive and private label women's, men's and homewares brands from Debenhams, including the Duchess of Cambridge's favourite designer Jenny Packham, Siren by Giles Deacon, Butterfly by Mathew Williamson, Henry Holland, J by Jasper Conran, Hammond and Co and Racing Green.

Mr Dean also promises to bring a touch of the British high street to St Collins, stocking youth fashion brands not available in Australia, such as Coast, Oasis, Wallis and Warehouse.

"We're elevating the environment and service levels but not the pricing," said Mr Dean. "It's got to be good value for money."