Department stores could soon turn into landlords rather than retailers to survive in the crippled industry, retail experts say.
As David Jones announced it would be renting out its entire electronics department to Dick Smith this week, retail experts were quick to herald it a win for consumers. They say the agreement will allow David Jones to revive its failing electronics department while giving Dick Smith an opportunity to reach the store's ''high end'' customer base.
Consumers will also benefit from cheaper priced electronics, but with the same consumer privileges such as guaranteed refunds.
The transition for consumers should be seamless, David Jones spokeswoman Helen Karlis said. The store will also maintain its classy and demure look, with no large, bright yellow Dick Smith signage to suddenly disrupt the store's ambience.
Australian Retailers Association executive director Russell Zimmerman said the move, which will be implemented across 30 David Jones stores, was ''evolutionary'' and likely to become a model of the future. ''DJs should look at other areas, as an example [their] whole footwear department,'' he said.
But the department store is adamant that electronics will be the only ''category'' of which they will relinquish control.
''We are clear that we are a department store and not a landlord,'' David Jones chief executive Paul Zahra said.
Until now, department stores have bought in specific fashion and cosmetic brands such as Country Road or the make-up brand Clinique to sell within their stores.
Under the new deal, David Jones' electronics, including DVDs, televisions and tablets, will be ''powered by Dick Smith''.
If the model ''stacks up'', this could be a solution for the beleaguered retail industry, said Australian Centre for Retail Studies research director Sean Sands.
''In a perfect world, Dick Smith knows the product better than David Jones can ever know [it], so they are going to give better advice and better pricing. So in the end … the consumers should be happy,'' Mr Sands said.
Myer now sells 15 per cent of its products by concessions - where the brand's own staff work in the store - but has no plans to follow David Jones' lead, its spokeswoman Jo Lynch said.
Over three years Myer has stopped selling whitegoods, CDs, DVDs, gaming and consoles altogether.
''Consumer behaviour has changed,'' Ms Lynch said. ''Whitegoods was the big category killer.''
Other department stores didn't fare so well this week. On Thursday, Target chief Stuart Machin agreed with one analyst that the business was broken.
Richard Goyder, the boss of Wesfarmers, has since denied it was broken, saying: ''There is a bit of work to do.''
Target was the only retail division within Wesfarmers to post negative earnings growth, as fiscal 2013 earnings slumped 44.3 per cent to $136 million and sales went backwards by 2.1 per cent to $3.66 billion.
Correction: The original version of this story attributed the denial that Target was broken to Stuart Machin rather than Richard Goyder.