SYDNEY, Australia (FNS) -- David Jones here, an upscale retailer, said there is great scope for expansion in the Australian food market, particularly in the meal solutions area, and is pushing ahead with plans for a foothold there.
Dick Warburton, David Jones chairman, told the annual general meeting that company research has shown there "was an unanswered requirement" in this area.
"We already have a strong capability in the food area. Our foodhalls produce some $54 million a year [in sales]," he noted. Foodhall is a trendy Anglo-Australian term used to lend glamour to everything from a school cafeteria to a gourmet food court selling prepared food and/or high-quality perishables.
To capitalize on this need, David Jones has opened the first of a range of Foodchain stores and, if these prove successful, intends to have a chain of around 40 units within five years. "We believe that we need to have around seven to eight stores to be in the profitable zone. This number should be in operation by the end of fiscal year 2002," he said.
He explained that Foodchain is very different from the company's existing foodhalls and concentrates on meal solutions, the "what am I going to eat tonight" market.
"We provide everything from fully and partially prepared solutions to fresh produce. There is also a wine and spirits component, a small amount of grocery and a 'sit down and relax' area," he told the meeting.
Warburton stressed that the company was not trying to compete directly with the grocery reailers.
He estimated the total Australian market for food consumed at home to be worth in excess of $60 billion annually.
"If we achieve 40 stores on the ground, it is possible Foodchain could account for around $270 million [in annual sales] or less than 1% of the total market. We will occupy a very specific niche designed to service the food needs of our core customers," he said.
Peter Wilkinson, David Jones chief executive officer, told shareholders the company plans to open its second Foodchain, also located in Melbourne, in first quarter 2001, with the first Sydney store following in July.