Upmarket department store chain David Jones hopes to make about 10 per cent of its sales online as it tries to lure new customers and avoid closing stores.
Chief executive Paul Zahra would not reveal details of the company's new online strategy until next month, but he said he was not concerned about the prospect of major overseas-based online players entering the Australian market.
After David Jones posted a three per cent fall in second quarter sales on Thursday, Mr Zahra described the retail chain's new online venture as a "true opportunity".
He also drew comparisons between David Jones and upmarket US department store chain Nordstrom which was making about $1 billion in online sales each year.
"They've been operating an online business for just over a decade and they're doing about 10 per cent of sales and about 20 per cent of EBIT (earnings before interest and tax) which has come from online," Mr Zahra told a media briefing.
"So it's a true opportunity.
"We'll describe how we are transforming the company to become a multichannel operation in March, but it is certainly a significant opportunity for the company."
Earlier this month David Jones signed up computer giant IBM to build a better web presence for the company and revive lacklustre internet sales which totalled just $3 million, or less than 0.2 per cent of sales, in fiscal 2011.
Despite recent warnings from shopping centre giant Westfield that Australian department stores were having a tough time in comparison to specialty stores, Mr Zahra said David Jones would not reduce the size of its stores or terminate leases on less profitable stores in conjunction with the online launch.
"No, not really," he said.
He said the company had a "real advantage" with its relatively small portfolio of 37 stores in high value, high growth locations.
"From our perspective it allows us to leverage locations where a David Jones store doesn't exist or a business case for a bricks and mortar (store) wouldn't stack up," he said.
He added that he was not worried by the prospect of a dominant online player such as Amazon entering the Australian market.
"No, because I think Amazon is well known," he said.
Basing Amazon in Australia might improve shipping times, but the industry was under duress, he said.
"If you think about the music industry has all gone digital. It's not a huge part of our business".
In February David Jones contracted IBM, for an undisclosed amount, to develop and integrate its web design, online application development, social media, promotions, analytics and reporting.
IBM will also provide back-end capabilities for order and inventory management and sales fulfilment.
Yesterday David Jones reported that customers were spending more than they did before the financial crisis as second quarter sales fell 3.1 per cent to $598.5 million.