David Jones’ new retail media business wants brand budgets – both from the suppliers it already works with as well as wooing marketers across travel, automotive and lifestyle. CMO James Holloman is backing shopper data from 5.4 million premium David Jones customers – and the ability to hyper-target them across DJs stores and digital assets as well as across the open web – in a plan to woo marketers to spend with its new Amplify media unit.
Years in the making, Holloman needed to convince powerful merchandising teams to cede control of how they strike deals with suppliers while building a tech stack from scratch and centralising control of its sprawling assets. Now the marketing-run Amplify has its own P&L and great management expectations.
Jonathan Hopkins, whose firm Sonder helped value DJ’s assets and develop the media business, says the average department store retailer in Australia could make $34m annually from media. But that’s the average, and DJs is top-end, with 55m annual store visits and 110m hits to its website. Its loyalty data-powered offsite media revenue could be significant but Holloman’s not putting a figure out there, and shies away from any suggestion it’s a ‘Cartology for premium shoppers’. “It’s early days,” he says. “But we’ve got ambitious targets.”
Here’s how Australia’s oldest retailer got into the newest, fastest-growing media game in town – and where it’s headed next.
Listen to the podcast here
What you need to know:
- Two years in the making David Jones is pushing into retail media, backing first party data on 5.4m higher-end shoppers to bring in more trade – and increasingly brand – marketing dollars.
- CMO James Holloman says the marketing-led Amplify unit, with its own P&L and autonomy, is also aiming to bring other advertisers into play – lifestyle, auto and leisure. The likes of Woolworths and Coles are aiming to do the same thing.
- But it may be that more resilient, higher end customers are more attractive targets. Time will tell.
- Either way, Holloman sees “incredible interest” from brands to tap its customers both on network – i.e. in its stores, online and within customer comms; as well as off-network – i.e. using its shopper/loyalty data to retarget across the web.
- David Jones worked with owned media consultancy Sonder to value its media assets and develop the business plan.
- Sonder founding partner Jonathan Hopkins says some retailers attempting media businesses have “failed spectacularly” by alienating merchandising teams, which have traditionally handled trade media negotiations and relationships, and chasing dollars.
- But he’s convinced DJs has done everything by the book – and is not about to “tattoo the baby” in terms of giving away key assets to advertisers.
- Sonder has calculated the average multi-brand retailer – like a department store – could generate an average of $34m in media revenues per annum as part of a broader $3.9bn owned media market in Australia.
- DJs is bigger than your average department store. So if Hopkins, Holloman and David Jones CEO Scott Fyfe are right, Anchorage Capital’s $100m acquisition of David Jones may prove a snip.
This article is based on both the podcast – listen here – and an earlier interview with James Holloman.
I am seeing brands incredibly interested in how they can invest their brand dollars into retail media, talking to key customers, really removing that wastage that you would see across a number of other media channels.
— James Holloman, CMO, David Jones
Retailers have been tapping supplier trade budgets in return for promotion in-store, catalogues or magazines for decades. But there’s billions of dollars more value to be had – which is why retailer media is rocketing toward the top of the channel pile, predicted by GroupM to eclipse TV spend, including CTV, globally within five years.
For retailers, the margins are massive compared to selling goods. In the US, Walmart last year posted $2.7bn in media revenues. If it maintains its 30 per cent growth rate, it could this year top $3.5bn. Locally both Woolworths-owned Cartology and Coles 360 are delivering strong double-digit media revenue growth as suppliers seek to get closer to the point of purchase and close the attribution loop through hard shopper data.
Australia’s two supermarkets have staked out the FMCG market and are now bidding to attract brand dollars from other categories. They’re gunning for marketing budgets via ads in their stores, websites, apps and customer comms (called ‘on network’ retail media), and by using their loyalty data to enable brands to target those shoppers across the web (called ‘off network’ retailer media).
David Jones sees plenty of room to do likewise – and is claiming the high ground, at least in terms of customer spending power, as the retailer moves to carve out its own slice. It has set up a retailer media business, Amplify, which, while “collaborating with merchandising and finance”, per CMO James Holloman, is marketing-led and has its own P&L and set of revenue targets. He says there is hunger from marketers to tap its upmarket customer base.
“I am seeing brands incredibly interested in how they can invest their brand dollars into retail media, talking to key customers, really removing that wastage that you would see across a number of other media channels,” per Holloman, a former marketer with Selfridges in the UK and LVMH-owned luxury travel retailer DFS Group in Hong Kong.
Merchandise collaboration is the big one. For years, media has been their bargaining tool – they've used that to increase margin or to leverage a deal. And setting up a dedicated retail media business disrupts that way of working, there's no way of sugarcoating that.
— Jonathan Hopkins, Founding Partner, Sonder
Boss mandate, merch follows
It hasn’t been easy corralling various functions and factions, convincing some to cede control of turf, and pushing through significant transformation even as the retailer changed hands, with private equity firm Anchorage Capital Partners acquiring the business at the end of last year for a reported $100m. Not to mention a certain pandemic, with its wild ecom to foot traffic swings – and back again – amid longstanding challenges for the retailer that was previously sold in 2014 to South Africa’s Woolworths Holdings for $2.1bn.
But Holloman says DJ’s top brass fully grasps the size of the media prize – and the merchandise teams have ultimately grasped the nettle.
“It’s taken two years, but it started with executive alignment. Our CEO Scott Fyfe and the rest of the executive leadership team have been incredibly supportive of this project from the beginning. And that’s been incredibly important to take this whole change journey. In saying that, of course we came up with the typical change challenges with some of the merchandising colleagues,” Holloman admits.
“I think that initial resistance definitely comes from their interest to protect their brand partners and their brand relationships – which many of them have spent decades to build. But we fully respect that and we’ve spent plenty of time collaborating with them on advertising principles, processes, ways of working and that will continually evolve,” he says. “Actually we now have some fantastic advocates in the merchandising team.”
He says the merch teams ultimately recognise that the media world – with its own language, metrics and jargon, is increasingly complex and “specific to a media-marketing universe, not necessarily a buying universe. So I think they soon saw that it was the opportunity for the marketing-media expert to come in and talk to the brand partner to get the best outcome for both parties.”
That and the fact that the average multibrand retailer in Australia – i.e. the likes of a department store – can make $34m annually from media, per owned media consultancy Sonder, which helped develop DJs media business. Those kind of high margin sums tend to galvanise management – and that’s the average. DJs is top-end, with 55m annual store visits and 110m hits to its website, while its loyalty data-powered offsite media revenue could be significant. Amazon, for instance, makes the vast bulk of its media revenues off-site, i.e. away from Amazon.com. This year the ecom giant is set to take north of $40bn in ad revenues.
Asked where DJ’s media revenue targets sits versus Sonder’s department store average, Holloman wisely gives nothing away. “It’s still early days,” he says. “But we have ambitious targets”.
With merchandise teams onside, they stand a much better chance of hitting them, per Sonder founding partner Jonathan Hopkins.
“Merchandise collaboration is the big one,” he says. “For years, media has been their bargaining tool – they’ve used that to increase margin or to leverage a deal. And setting up a dedicated retail media business disrupts that way of working, there’s no way of sugarcoating that.
“However, once they realise the true value of the media, and recognise it’s better for the business, if there is transparency around its usage, they tend to come around and understand it. Ultimately, they’re happy to leave the media conversation to media experts, rather than having to talk about things that aren’t their focus point.”
You might chase a bit of money in the short-term, but long-term, it's going to fall over – and there are a few horror stories out there.
— Jonathan Hopkins, Founding Partner, Sonder
‘Not tattooing the baby’
Holloman says David Jones has “almost 30,000 annual assets for brands to partake in, right across the funnel. So from in-store, online publishing, email, and even off site”. But there are some areas that remain off limits, such as the home page. “Tattooing the baby”, as Sonder’s Hopkins puts it, is not on DJ’s retail media agenda – and he says taking the time to properly value media assets and put clear guardrails in place is critical to success.
“We’ve seen retailers fail spectacularly by not involving the right people in that conversation and not setting guidelines. I can think of a couple of examples where certain departments within the business have been very gung ho and chasing the dollars straight away without putting the structural pieces in place, and without having the change management and the senior leadership involved,” says Hopkins.
“Ostracising the merchandise department and not involving your executive team are a surefire way to fail. You might chase a bit of money in the short-term, but long-term, it’s going to fall over – and there are a few horror stories out there. But if you follow the simple rules of engagement, then you should be fine.”
Off-site advertising will use our loyalty data and our financial services data. We have a credit card with American Express. We know that 5.4 million customers shopped with David Jones last year; we know about 70 per cent of them ... Arguably this approach is probably even more effective than the current approach of buying against lookalikes and cookies.
— James Holloman, CMO, David Jones
Targeting new brand dollars
Holloman is now moving to line-up incremental revenue beyond trade marketing budgets as Amplify prepares for full-scale launch in January. In a bid to take share from other media owners, he’s touting “opportunities [for brands] to hyper target their core customers, therefore there is less wastage than going out to the total media market.” And Holloman says he is “seeing brands incredibly interested in how they can invest brand dollars into retail media.”
David Jones is also aiming to attract marketing budgets from brands outside of its core suppliers. Holloman cites auto, travel, lifestyle as key targets for what retailer media players like to call ‘non-endemic’ advertisers and Amplify is partnering with News Corp-backed Medium Rare Content, which also works with Qantas magazine and Bunnings, to get them through the door.
Plus, it’s aiming to plug in its loyalty data to enable sharper targeting across the open web. Shopper/loyalty data such as FlyBuys data has been used similarly in Australia for some time. Now retailers are taking greater ownership of the process, in some cases doing the buy, adding the data and selling it on to brands.
Amplify will work through a clean room, which enables data matching, so that brands can then use that data to target customers ‘off network’ “whether it be programmatic or social, Youtube, etc.,” says Holloman. Down the track it will work with an SSP and enable self-serve. “We’re just working through the details,” per Holloman, but its internal system, enabling brands to upload creative, book and schedule is all in place. And it’s a far cry from traditional “legacy” trade media approaches, “where everything was running off Excel,” per Holloman.
“In terms of curating off-site advertising, it will use a lot of our loyalty data and our financial services data. We have a credit card with American Express, for example, so we know that 5.4 million customers shopped with David Jones last year, and through a number of our platforms, we know about 70 per cent of them,” says Holloman.
“This is incredibly interesting in terms of off-site in a world where [third party] cookies no longer exist. So our first party data will be incredibly valuable for advertisers to connect with customers without that level of waste,” he adds. “You could argue that this approach is probably even more effective than the current approach of buying against lookalikes and cookies.”
So with its own P&L, tech-stack, rich first party data, a push to bring in non-core suppliers and deliver buys across the open web, is David Jones’ retail play a ‘Cartology for premium?’
“I’m not sure I could say that,” says Holloman. “Cartology has done an amazing job for many years – and as you say they have [built] an empire. But I think this is the beginning of what could be a really interesting business unit for David Jones.”
Plus, while the likes of Cartology and Coles 360 are also looking to bring in a different set of advertisers outside of FMCG, David Jones is arguably aiming at a different pool of budgets.
“We wanted to make sure that this was a retail media network that was talking to the Australian premium shopper,” says Holloman.
He says despite the spending crunch, swathes of its higher rolling customer-base appear resistant to the current spending squeeze – as evidenced by the last few months: Since June, swimsuits and suitcases have been flying of the shelves “which does indicate a premium shopper who is enjoying Europe over July and August”, per Holloman.
“So from early indications of last quarter’s market share, it does look like our premium customers are holding up better than total retail. But we are going into a challenging next six months, which is where you win and lose in retail, particularly department stores.”
Either way, incremental revenue from brand marketers keen to tap consumers still spending hard looks set to follow. If David Jones’ retailer media unit gets anywhere close to Sonder’s $34m department store media revenue average, Anchorage’s $100m buying price may prove to be a steal.