David Jones has announced a “revolutionary” foray into Australia’s multi-billion-dollar grocery sector with plans to add an upmarket food offering to its stores, pitting itself against supermarket giants Woolworths and Coles.

The South African-owned retail chain, which has built its name as a high-quality goods outlet, plans to establish itself as a leading Australian food name, offering fresh quality produce and prepared meals.

“There is a gap in the market, it’s not being provided by Woolworths or Coles and we can fill that gap,” Ian Moir, head of South Africa’s Woolworths Holdings Limited – David Jones’ owner – told analysts on Thursday night (AEST).

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It could be a tough gig. A spokesperson for up-market Australian grocer Thomas Dux recently told News Corp a “poor trading environment” led them to close four of their nine stores nationwide.

But one expert told The New Daily there was potential for a successful premium offering.

From high fashion, to high quality food. The company believes it is the next “big business”. Photo: Getty

“There is room, but probably the only room is to have a different range of products,” Curtin University Graduate School of Business Associate Professor Paul Alexander said.

“If they [David Jones] want to be cost competitive and just want to sell a product I think they would struggle, but if they want to specifically move to premium brands that are outside the normal range these other stores have, then I think they may well establish quite a solid client base, especially if they put it through their David Jones brand.”

The retail chain is owned by South African-based Woolworths Holdings Limited, not to be confused with the Australian retail chain Woolworths Limited.

Mr Moir said research into the Australian market put food as the “clearest opportunity … for a very long time”.

“It needs to be revolutionary,” he said.

“It needs to be a significant improvement in the offer, so freshness needs to be better, there needs to be a greater prepared offer, it needs to look like and feel like (our South African stores) but an (Australian version) with Australian products and Australian focus.”

It would not be David Jones’ first attempt to break into the supermarket industry, although it will be the first attempt since the company changed hands. In 2003, they closed down Foodchain stores after recording a loss of $120 million.

Battle for premium customers

Australian company Woolworths Limited announced in early February it would close four of its nine Thomas Dux stores due to poor trading. Photo: Getty

David Jones was well-placed to peddle up-market groceries, Dr Alexander said.

Unlike competitors Woolworths and Coles, who were “cross competitive” and aimed to drive prices down, DJs could “rely heavily on the brand and customer loyalty”.

It did not mean an upmarket war wasn’t on the cards.

“Coles and Woolies would love to get into the premium space – they would like to get into every space they can,” Dr Alexander said.

And the war may have already begun.

Although David Jones indicated they would “build and build well over time” in the grocery sector, Woolworths Australia indicated earlier this month it was already planning to expand its range of gourmet ready meals, inspired by UK luxury food retailer Marks and Spencer.

“We’ll be competing not just with [other] supermarkets but with quick-service restaurants,” Woolworths chairman Gordon Cairns said, according to reports.

The New Daily contacted David Jones for comment, but they did not respond before publication.