Myer: Can it survive?

Myer will focus on
prices and customer
service in a bid to lure
back once-loyal
shoppers, but analysts
say store closures
should occur.  Photo: Louis Douvis.

Myer will focus on prices and customer service in a bid to lure back once-loyal shoppers, but analysts say store closures should occur. Photo: Louis Douvis.

To make a comeback, Melbourne’s most beloved retailer must first solve its identity crisis.

It’s 10am on a Saturday and inside Myer’s iconic Bourke Street store, neon pink signs spruik the retailer’s mid-season clearance sale.

On the apparel floors, every square metre, including the walkways, are cluttered with unsightly clearance racks crammed with discounted items.

But I’m not here to buy a new jacket or a pair of jeans. I buy those online these days. Rather I’m here to see if the department store that has been a central and much-loved part of Melbourne’s retail landscape for more than a century is as dire as most retail commentators will tell you it is.

Solomon Lew, Myer’s largest shareholder, has dubbed it a “basket case”, and Australian Fashion Week founder Simon Lock, arguably the country’s greatest supporter of Australian designers and retailers, says he wouldn’t shop there.

It seems he’s not alone. In March, the embattled retailer posted a first-half loss of more than $476 million, with total sales falling by 3.6 per cent.

The disastrous result came less than a month after the sudden departure of its chief executive Richard Umbers and just weeks after it dropped out of the ASX 200 index, for Australia’s top 200 public companies, for the first time since it floated in 2009. Its share price has dropped so low – to just 39.5 cents (at time of printing) compared to $4.10 when it floated – analysts believe a predatory takeover, or a merger with long-time rival David Jones could be imminent.

Solomon Lew, Myer's chief agitator. Photo: Josh Robenstone.

Solomon Lew, Myer’s chief agitator. Photo: Josh Robenstone.

In early April, The Australian reported that David Jones’ South African parent company, Woolworths Holdings, was considering an acquisition of Myer.

Woolworths Holdings have said the rumours have “no basis” and when TWR asked Myer if it was aware of any serious offers to buy the business, a spokesperson simply said: “We don’t comment on speculation or rumour”.

Last week, Myer introduced a new era by appointing British retail supremo John King (he ran the House of Fraser department store for eight years and oversaw its transformation) as its new chief executive and its sixth biggest shareholder.

“I’m excited to lead this iconic Australian company, which, like all global retailers, is facing significant change in both the retail environment and consumer shopping habits,” King said in a statement.
“I’m looking forward to the challenges and opportunities of this role.”

Retail experts claim the significant increase in online shopping and the international retail invasion, which has included the likes of Zara, H&M, Uniqlo, and Amazon, means there is no longer room for both Myer and David Jones in their current format.

Certainly, everyone agrees Myer, with 64 stores, has far too many and needs to close its underperforming locations and renegotiate the way out of its long-term and costly leases.

“Traditionally, the big appeal of department stores was that you had all this choice and variety under the one roof,” retail expert Steve Ogden-Barnes from Deakin University says.

“Now you have all that choice under one virtual roof. Online is the new department store and so people don’t need to go into places like Myer any more and, in fact, they’re not.”

Simon Lock argues the department stores that continue to thrive internationally, such as Selfridges in London and Galeries Lafayette in Paris, are the ones that offer a “unique physical experience that you can’t get online”.

Lock, who now lives in Paris where he runs Ordre – a global online wholesale platform for the ready-to-wear fashion industry – says: “Everyone wants to experience a bit of retail theatre. They want to be entertained and excited. Myer lost that sense of theatre a long time ago. Their brands aren’t exciting, the way it is merchandised isn’t exciting. Customer service has been a problem for a long time. I don’t want to go there.”

It’s a harsh analysis from someone who made a 15-year career out of promoting Australian fashion brands and retailers.

Just as critical is Premier Investments’ Solomon Lew, who has a 10.8 per cent stake in Myer.

Lew, who has been agitating to oust the Myer board but has said he has no “current” intention of making a takeover bid for the retailer, says the store is a “basket case” and that it “has lost its way’’.

Galeries Lafeyette, the French department store experts say Myer needs to emulate.

Galeries Lafeyette, the French department store experts say Myer needs to emulate.

No one, not even Myer, denies that while it was scrambling to stem its haemorrhaging sales to online and international retailers, it lost sight of who it was. In addition, it made acquisitions in the form of Topshop Australia, which collapsed last year, and the struggling Sass and Bide fashion label.

As the founder and CEO of the Retail Doctor Group, Brian Walker, puts it: “Myer’s not sure if it’s David Jones or Kmart.”

Even Myer admits it has an identity problem. At its investor briefing in March, Myer executive chairman Garry Hounsell conceded elements of the New Myer Strategy, which was launched in 2015 and focused on a wealthier, more fashionable and aspirational customer, had failed.

He said it was now focusing on “driving products, prices and service to attract our traditional customer back”.

In that briefing, Hounsell said its plans to turn the business around included a renewed focus on exclusive and on-trend “Myer-only” products, improved marketing and visual merchandising in store, improved customer service, including the introduction of a new sales commission trial, and an enhanced website.

But retail experts and analysts say it will take something far more radical if Australia’s grande dame of retail is to survive.

“It has way too much debt and too many stores. In the short term, it needs to accelerate the closure of underperforming stores and renegotiate its way out of its long-term leases,” Walker says.

“Longer term, if you look at its share price it does look very vulnerable to being taken over.”

Moments in the store’s history

1900: Myer opens

Photo: supplied

Photo: supplied

Sidney Myer and his brother Elcon opened first Myer Store in Bendigo, launching a retailer that would gain iconic status. The pair opened a second Bendigo store in 1908.

1956: Christmas windows

Photo: supplied

Photo: supplied

By the 1950s, Myer is a fixture in the lives of many Australians. It debuts its Christmas windows in 1956 to coincide with the Melbourne Olympics.

2007: Jennifer Hawkins joins Myer

Photo: Eddie Jim

Photo: Eddie Jim

Former Miss Universe Jennifer Hawkins signs on as Myer’s ambassador, and sashays on the runway at fashion launches and the Spring Racing Carnival.

2009: Public float

Photo: Craig Abraham

Photo: Craig Abraham

Myer CEO Bernie Brookes spearheaded the department chain’s public stock exchange float; the biggest in Australia in two years, following the Global Financial Crisis.

2011: Melbourne store revamp

Photo: supplied

Photo: supplied

Myer’s Bourke Street flagship store undergoes a redesign by firm NH Architecture. The flash new fitout wins a national commercial design award.

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