An end to discounts? Retailers wish Just as well Paul Zahra is a retailer instead of a banker - otherwise the Australian Competition and Consumer Commission might be wondering if he was attempting a little price signalling while announcing disappointing sales figures. David Jones" Zahra isn't the first shopkeeper to let the market know what he thinks about that nasty habit of discounting. Even while announcing a "Super Saturday" sale, Myer's Bernie Brookes seemed to be warning Target not to pull the trigger on a discount war. Bernie also came out as a fan of a weaker dollar, claiming there would be more pluses than minuses for Myer. That argument seems to come down to making international online shopping a little less attractive, but a weaker Aussie equally makes prices on imported stuff at Myer - the vast majority of it - a little less attractive too. Or maybe a softer currency could become an excuse for prices at the troubled discretionary department stores stabilising and inching higher. Middle-order players in the department store space ... Myer and David Jones. That's what Paul Zahra is rather desperately hoping, even while saying he expects everyone else to be slicing prices on excess winter clothing: We continued our strategy of reducing discounting throughout 3Q13 (the April quarter) notwithstanding aggressive promotional activity in the market. Most notably our mid-season sale was reduced by one full week and we removed our $10 million floor stock clearance event. Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable. Having said this, in the short term we expect to see heavy discounting as other retailers attempt to address excess winter inventory issues. Whilst we do not propose to match this expected discounting activity our key June clearance will need to be competitive and we will need to maintain our marketing share of voice. So we have David Jones signalling Myer which is signalling Target which is busy signalling distress as the new CEO works out what the chain should be after his two predecessors let it wander in the face of the resurgence by Australia's biggest department stores: Kmart and Big W. And that's why, for all the publicity they garner (including this spray), David Jones and Myer aren't nearly as important as their media coverage might indicate. Far from representing the mindset of the Australian consumer and the overall health of Australian retailing, the two mid-tier department stores only represent themselves as they struggle to update their 19th-century business models. They are just the middle-order players in the department store space, which itself is the smallest of the Australian Bureau of Statistics" six retail categories. A symptom of how sad they've become was that Myer's 0.4 per cent lift in April quarter like-for-like sales last week was greeted as good news, holding out the possibility of recording its first full financial year of sales gains since 2007. Yes, 0.4 per cent - a shop assistant's sneeze. And never mind today's announcement that DJs" like-for-like sales went backwards by 3.4 per cent. Meanwhile both David Jones and Myer try to make the most of their online sales picking up - doubling, says DJs, up 200 per cent, says Myer - but those percentage are from a very low base and they remain unprofitable. I glimpsed a "unique browsers" graph for the 2012 calendar year which showed David Jones pretty much flat throughout, Myer picking up a little and The Iconic soaring far above them. The Iconic is an Australian e-tailer - not one of those nasty foreigners avoiding GST - and works on convenience, not price. But The Iconic doesn't make a profit either while it's busy buying customers. With private equity backers and founded by a couple of Boston Consulting alumni, the business plan could well be to build the brand and then offload it to either one of the two obvious local candidates struggling in cyberspace or one of the foreign retailers who relish our market - companies who think Australian consumers are just fine and far from being on strike. Michael Pascoe is a BusinessDay contributing editor