How David Jones is reclaiming the elusive 25% profit margin most retailers are chasing
With retail data more abundant and accessible than ever, using data intelligence to align inventory with demand is no longer optional, it’s essential. The real opportunity lies in closing the profit gaps created by inaccurate buying decisions.
According to research firm, IHL, inventory distortion cost the retail industry an estimated $1.7 trillion in 2024 alone - $1.2 trillion due to out-of-stocks and $554 billion from overstocks. IHL’s Fixing Inventory Distortion report predicts that retailers who fully leverage intelligent data platforms and machine learning could improve gross margins by 25% or more by 2029.
For Michaela Wessels, CEO and Co-founder of Style Arcade, an AI-powered merchandising and buying platform, that 25% uplift has always been within reach - retailers just lacked the tools to access it.
“With booming revenues and bullish growth in past years, many fashion retailers were never forced to pursue that extra profit,” says Wessels. “But in today’s climate of high data scrutiny and AI accessibility, the answer is finally within reach. It lives in the deepest layers of your product data.”
Much of the problem lies in manual ordering. Most inventory distortion stems from inaccurate purchase order quantities, which are driven by skewed sales data due to out-of-stocks at the store and size level.
“Merchandising teams are often ordering manually, using spreadsheets to plan product, store, and size breakdowns,” Wessels explains. “That process is not only complex- it reinforces existing inaccuracies in the data.”
Wessels estimates that manual buying using spreadsheets typically accesses only half of the data points available and just 20% of those are fully accurate.
This is where AI steps in. With platforms like Style Arcade, retailers can unify and cleanse all available data to generate accurate order recommendations at a precision that spreadsheets simply can’t match.
One major player already making the shift is 187-year-old department store David Jones. In partnership with Style Arcade, they’re tackling inventory challenges head-on by refining stock allocation, minimizing markdowns, and unlocking greater profitability.
“While it’s still early days, industry research suggests that intelligent data platforms like Style Arcade can improve gross margins by up to 25% over time,”
said Bridget Veals, Executive GM of Womenswear, Footwear & Accessories at David Jones, in an interview with Ragtrader.
“Given the scale of our operations, we expect to see meaningful efficiencies in profitability and inventory turnover while continuing to deliver exceptional service to our customers.”
About Style Arcade
Founded in 2018, Style Arcade is an AI-powered merchandising software suite offering digital range planning and analytics, which focuses on delivering intelligent merchandising recommendations for retailers to achieve greater revenue and profit growth.
About David Jones
David Jones is Australasia's leading premium department store retailer. The iconic department store first opened its doors in 1838 with the mission to sell the best and most exclusive goods. David Jones has 40 locations across Australia and New Zealand as well as davidjones.com in Australia and is the oldest continuously operating department store in the world still trading under its original name.