David Jones Collapse: Fifth-Generation Heir Warns of 'Race to the Bottom'

Expressions of interest to buy David Jones close on Friday, after Australia's oldest department store chain collapsed into receivership and administration after 187 years of trading.

Charles Edward Lloyd Jones, the last fifth-generation member of the founding family to work in the business, has laid out a blunt diagnosis of what went wrong. The 68-year-old left the company in 1993 after finishing as store manager at the David Jones Chatswood store on Sydney's lower north shore, following similar stints at Bankstown in the west and Bondi Junction in the east.

"If you don't have a unique offer, then it's a race to the bottom with price," Lloyd Jones told AAP. "And then if it's a race to the bottom with price, people start cutting staff and when they start cutting staff the service diminishes."

Asked whether he had ever circled a David Jones floor looking for someone to ring up his purchase, he answered: "Too many times."

Why did the chain collapse?

Administrators are seeking a buyer or a recapitalisation of the business after a rental dispute and falling profits pushed the chain to the brink. The retailer was delisted from the stock exchange in 2014, and Lloyd Jones argues the business has since lacked the service, unique offerings and leadership that once defined it.

Matthew Hutton of administrator McGrath Nicol said interest in the sale process had already been "extraordinary", reflecting the chain's status as an Australian shopping destination since 1838.

"We are actively engaging with domestic and international parties that have experience in both turning around and operating highly successful retail department stores," Hutton said.

What must a new owner change?

Lloyd Jones, whose career also included retail jobs in Malaysia, Hong Kong and at rival chain Myer, says any buyer will need to shrink the footprint. The chain must cut its square footage and store count, and build as unique an offering as possible, "because otherwise you're just going to be in the same situation in another three to five years."

He also wants management to "get out from behind the desk" and onto the store floors, to see first-hand how customers and staff interact.

The stakes are concrete. David Jones has up to 6000 staff across its 37 Australian stores, all waiting to learn whether administration marks the beginning or the end of their jobs.

"The staff need leadership," Lloyd Jones said. "The period of time that I worked with the company, in the 70s through the 80s particularly, the training you got as a manager was phenomenal, and you understood the whole business … and how to make a buck."

What made the golden era work?

The post-war period up to the late 1990s was a golden era for the retailer, in Lloyd Jones's telling. The chain thrived by bringing never-before-seen brands such as Dior and George Jensen to Australia, and by promoting leaders with Australian Defence Force backgrounds.

"Their experience carried forward and out into the suburbs, and if someone didn't have that attitude then they generally didn't last," Lloyd Jones said.

He has been out of the family business for about 30 years and watches the current crisis with a sense of disconnection. But he said: "But if I was working there I would be shattered … and I can understand their anxiety."

He remains in touch with many former colleagues from what he calls the golden era of department stores, and frames the turnaround task in community terms.

"So I think caring about the community, which is your staff and customers and your suppliers, is paramount," Lloyd Jones said.

His message to bidders is effectively a test: bring a unique offer, fewer stores and visible leadership, or expect the same collapse again within five years. Friday's deadline will show who is willing to take that test.