In 2014, then Myer chairman Paul McClintock told shareholders department stores around the world were adapting and prospering in a new retail landscape. "I have every reason to believe that Myer is on its way to doing the same," he said. Having bought David Jones for $2.2 billion the same year, Woolworths chief Ian Moir confidently declared the department store was not dead, only "mediocrity is dead". "We want to build one of the biggest retailers in the southern hemisphere,” he said. It's unlikely either would say the same today. US department store chain Barneys is reportedly teetering on the edge of bankruptcy and British top retailer Debenhams could collapse next month.

Loading Replay Replay video Play video Play video In Australia, David Jones slashed 120 jobs across its regional stores and head office. Discount department retailer Big W also began the closure of 30 underperforming stores. Department stores around the world have been on a downturn for decades, said Credit Suisse analyst Grant Saligari. Now that trend is starting to hit Australia, he said. "Shopping habits have changed, we’ve seen growth in different category pillars, and there’s been an evolution in online shopping," Mr Saligari said. "There’s no light at the end of the tunnel, it’s a structural decline."

This decline has been exacerbated by strong headwinds in the retail sector, with David Jones pointing to "sustained and unprecedented" economic pressures that are weighing on consumer spending as the reason for its writedown. Although overall retail turnover was up 0.4 per cent in June, ANZ analysts warned year-on-year growth of just 0.2 per cent was "very weak", and lowest since the 1991 recession. There’s no light at the end of the tunnel, it’s a structural decline. Credit Suisse analyst Grant Saligari And what's perhaps even more worrying, online sales declined as well, with NAB's Online Retail Sales Index for June reporting negative month-on-month growth of 1.6 per cent. Despite a 3.4 per cent bounce in May, year-on-year online sales growth is "barely" up 0.5 per cent, the bank said. Management to blame, says Harvey

Harvey Norman executive chairman Gerry Harvey told The Age and The Sydney Morning Herald that while being in retail was "very hard" at the moment, he did not believe it the sector was at recession levels. The prominent Australian businessman placed the blame for the nation's two big department stores' decline at the feet of Myer and David Jones' management, claiming the two companies had a history of not having the right people at the helm. Gerry Harvey blames management mistakes for Myer and David Jones' decline. Credit:Ben Rushton "When you’ve got a revolving door of chief executives at a company and that company’s not going forward, you’ve got a chief executive problem," Mr Harvey said. "If they think we’re in a recession, that’s fine, but I think [conditions] have got to be a bit worse for that."

Former David Jones CEO David Thomas resigned in February for unspecified "personal reasons" after just 18 months running the 181-year-old department store chain. Mr Harvey was more bullish on the overall future for Australia's department stores, saying he did believe there was light at the end of the tunnel. Loading Investors aren't as sanguine though, with Myer shares down 5.5 per cent and many viewing David Jones' writedown as the canary in the coal mine for the big department stores. The department stores' decline runs contrary to the broader retail sector, with numerous listed companies hitting 52-week share price highs in recent weeks, including supermarket chains Woolies and Coles, as well as electronics and furniture stores JB Hi-Fi and Harvey Norman.

Because of the run-up in share prices, some analysts are advising investors to cash in their retail stocks before the companies report earnings later this month, with Credit Suisse predicting any misses against market expectations would result in "significant price falls". "Generally, valuations for retail stocks are well above historical averages on both absolute and relative to market basis," the broker said. "Whilst a premium is not surprising during a period of falling interest rates, the retail trading environment has been challenging, which results in a greater than usual risk of misses." The slow road to re-invention Both Myer and David Jones have earmarked significant growth strategies to help them turn their fortunes around, touting an improved in-store experience and enhanced online offerings. A $400 million renovation of David Jones' flagship Elizabeth Street store in Sydney is underway, and the business is aiming to boost its online sales to 10 per cent of its overall sales by 2020, from 7.7 per cent currently.

The matter is that I think they know what to change, but I don’t think they know how to. They’re in a death spiral. Retail consultant Geoff Dart Last year, Myer finalised its $600 million 'New Myer' re-invigoration plan, which aimed to boost its online and digital capabilities and reduce its floor space to save costs. It's now embarking on a new 'Customer First' plan, which has similar goals of transforming in-store experiences and building its online offering. The company has seen some success with its focus on digital, reporting an 18.6 per cent increase in online and omni channel sales for the first half of the financial year. Mr Saligari said the plan for cost reduction through smaller store footprints and a pivot to online was the "way forward" for the businesses, but may not be a perfect solution.