Myer was once an Australian icon of retail, but is now heading down a negative slope, with a report of an 80% drop in profit. On top of that, the chain has had to close three more stores. These reports are making not only retailer analysts but customers wonder whether there is a future for the retailer at all. Analysts from the CSLA pointed out this week that Myer had not improved their sales revenue in thirty years, which begs the question: could this be a deep-seated rut?
Consumers are asking whether Myer’s value proposition is clear enough. They do have some amazing things; like the popular Dry and Tea salons at some Myer stores. Even if you exclude the recent misadventures, it looks better with the sales flat. The share price, though, had fallen to a record low of around 60c – compared to the $4.00 that we could see when it relaunched into the stock market in the year 2009. Unfortunately, no fancy gel nails service is going to save those numbers.
The CEO of retail group consultancy Brian Walker has stated that Myer most likely won’t disappear. Still, he believes it will shrink to around 40 stores (currently sitting at 60), and the big stores will shrink. This is similar to what happened to the David Jones stores (e.g. the one developed at Barangaroo Sydney). Walker thinks we will see more technology, however, there will be less stock. He also stated that the stores would become more experimental and the customers that visit are more there to try new things and experience innovations and brands. It seems the business is heading into a harsh and modern reality. Myer has a vast legacy of brands in its stores, but the stock cannot compete with Zara, Uniqlo and H&M – so are they swimming against a harsh tide?
Another challenge that Myer faces is Amazon, which is bound to open in Australia soon. The online retailer only makes up about 8 per cent of the market today. Still, it is growing into the double-digit levels with speciality retailing sitting at about two to three per cent. Walker states that Myer has shot themselves in the foot a couple of times, by losing focus on their target customers. Myer has also made moves that failed to pay off, like the failing forays in the brand of fashion Sass and Bide along with Topshop and UK franchise is now in administration. This cut $45.8 million from last year’s evaluation.
Richard Umbers, the CEO of Myer, had grand plans to take Myer to new heights by offering huge discounts. It was a marketing gimmick, with something like 20 per cent off all stock. However, the storewide trick failed to do its job. Instead of increasing revenue, it primed customers up to wanting more sales prices in the future. The strategy has changed now, where the focus on bargains is contained to around eight rural shops including Knox and Frankston, in Victoria. The future plan is to have floors that are dedicated to discounts, which he hopes will make the stores look fresher.
For Myer, things don’t look like they are improving in the future. The sales for the years 2017 and 2018 were subdued, and their ‘New Myer’ approach has been launched with the fanfare in the year 2015, and it’s been stated that it looked tarnished. The Myer stores are still standing, but they are going to need a makeover that’s for sure.