Harvey Norman co-founder Gerry Harvey says David Jones’ financial collapse is a sign that department stores — once the giants of Australian shopping — will not be able to survive against speciality retailers, online shopping and price-conscious consumers.

“I think the day of the department store is probably over,” he told The Nightly.

The retail legend, who said David Jones’ failure was “like someone close to you dying”, disclosed that he considered buying the company when it was listed on the stock exchange in the late 1990s or early 2000s for his wife, Harvey Norman chief executive Katie Page.

“I’m glad I didn’t,” he said. “But I never wanted to because she said: ‘I can run David Jones’. My problem at the time was, if she goes there and runs that, she’s not going to (run) Harvey Norman, so I won’t want her to do that. And if she tries to run both, it’ll be too difficult.”

The future for department stores, which once sold everything from high-end fashion to washing machines and furniture, looked dependable at the time. But the rise of Amazon and other online retailers and the development of large, specialist outlets such as Harvey Norman, Bunnings and JB Hi-Fi has turned them into faded symbols of the pre-internet economy.

David Jones’ private equity owners placed the company in receivership on Thursday, a step short of bankruptcy designed to give the business time to negotiate an agreement with lenders that would allow it to continue operating.

Unable to afford the rent on about 40 stores, the 188-year-old company is looking for cash from a new investor. Even if the administrators can arrange a financial bailout, any new owners may go ahead with a plan devised by the previous management to cut the number of outlets by about half.

Brain drain

The challenge of changing consumer habits was likely compounded by five interest rate rises this year, which have been particularly tough on retailers selling what are called “discretionary” goods, or fancy clothing, shoes and homewares that are not essential.

“I think every furniture, electrical leading retailer out there at the moment is under extreme pressure,” Mr Harvey said. “We’re the landlord and we get all the figures of all the retailers, so we know what’s happening. So they’re nearly all down.”

As sales slowed, debts rose and customers shopped from their bedrooms, David Jones suffered the retail equivalent of a “brain drain”.

Career sales assistants who had turned the stores into institutions through deep knowledge of their products and personal relationships with shoppers retired or resigned. They were replaced by a smaller, part-time workforce that gave the stores a generic atmosphere.

Executives who combined expert commercial knowledge, high-end management skills and an innate feeling for consumer trends became hard to find.

“You’ve got to understand fashion, cosmetics, advertising, promotions, retail, people,” Mr Harvey said. “Today, they don’t exist. And then all their staff became part time. Some of them know a little bit about the product. The great majority don’t know anything.

“You run into them and say ‘can you tell me about something’ and they say ‘I’m going to university. I only work here two days a week’.”

Financial engineering

David Jones’ financial structure became a problem too. Unlike Harvey Norman, which has a $5 billion property portfolio, David Jones’ previous owners, Woolworths of South Africa, sold its major stores in Sydney and Melbourne and rented the buildings back from the new owners.

Known pejoratively as asset stripping, the transactions were designed to help Woolworths, which is separate to the Australian grocery stores, recoup the $2 billion it spent buying David Jones in 2014.

But the property sales left David Jones dependent on its landlords, including Scentre Group, the real estate business previously known as Westfield Holdings. David Jones’ last published accounts list more than $1 billion in “lease liabilities”, meaning that real estate investment trusts are likely bigger creditors than banks.

To save money, David Jones delayed payments to suppliers. While the technique saved cash in the short term, damaging these important business relationships was a sign of desperation. Competitors say it could have triggered a backlash that cost David Jones more in the long run.

In 2022, Woolworths sold the business for between $100 million and $120 million to Sydney private equity firm Anchorage Capital Partners, which began what it said was a $250 million “transformation plan” dubbed Vision 2025+.

The money was spent refurbishing stores in Sydney and Melbourne in the expectation shoppers could be lured back after the pandemic lockdowns by attractive decor and stock displays. The plan did not work.

Despite generating revenue of around $2 billion, David Jones posted a loss of $74 million in 2023-24, which grew to $96 million in 2024-25. The business has not filed its accounts for the last financial year, but they are likely to be ugly.

Its perennial competitor, Myer, posted a $277 million loss in 2025-26 on revenue of $4 billion. While the big loss was due to write downs, the accounts were another example of how difficult it is for cavernous department stores occupying prime property to compete with retailers whose main real estate is on the internet.