Retail giant David Jones (ASX: DJS) has taken advantage of rival Myer's (ASX: MYR) week-long website outage by offering customers additional online-only specials – a decision which Myer's chief executive Bernie Brookes has acknowledged as a smart move.
While Myer's site returned to service on Thursday, it spent last week out of action after having experienced problems on Boxing Day. The store has promised free postage for orders placed by Sunday to win back customers, but the damage may already have been done with David Jones announcing they had received 1.5 million visits since its clearance sales went live on Christmas Eve at 6pm. Online sales for the period have doubled compared to last year.
According to David Jones' chief executive Paul Zahra, the additional discounts were to "reward our online customers for their loyalty and patronage throughout the year, in particular during the current clearance period." Brookes, on the other hand, said it was a smart move by DJs to "capitalise on the fact we were offline."
Although analysts have suggested that the website's failure would result in reduced sales, increase the company's cost of doing business (CODB) and could possibly also result in capital expenditure, Brookes has stated that his company would lose no more than $1 million in sales as a result of the issue. He also stated that while offering free postage and discounted goods would impact profitability, it is the cheaper alternative compared to taking out advertisements to apologise to customers.
Foolish takeaway
While online sales account for less than 1% of Myer's $2.8 billion in sales, the blunder will not have a major impact on the company's earnings. However, Brookes and his Myer team will need to rebuild confidence in their online business as the popularity of online shopping continues to rapidly expand.
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