There’s no time for business as usual at Olivia Wirth’s Myer

Olivia Wirth is looking to make her mark in the top role at Myer and has wasted no time in scoping out a path to higher earnings through loyalty, margins, and sheer heft.

Myer executive chairman Olivia Wirth.

Olivia Wirth needed to go big if she was going to move the needle for Myer shareholders, and the Apparel Brands bid provides an opportunity while allowing her to play to her strengths.

The story of Australia’s great department stores over the past couple of decades has been one of genteel, and sometimes precipitous, decline.

Both Myer and David Jones were too late to the e-commerce revolution, and have spent the past decade or so playing catch up.

Myer now finds itself a high-turnover, low margin business, in a sector defined by cut-throat competition from online rivals.

Doubling down heavily on bricks and mortar stores, to the tune of several hundred, might seem a strange response to this dynamic, but given both Myer and Apparel Brands are arguably lean and mean, having survived the pandemic, both could be considered match-fit on the cost front.

What the merger would deliver in spades for Wirth would be margin and scale, a supportive Solomon Lew — which is much-preferable to the opposite — and a loyalty scheme which provides a potential avenue for growth, an area Wirth knows well as the former head of loyalty at Qantas.

The Myer One scheme currently boasts 4.3 million active members, with 374,000 new members joining in the most recent trading half.

But, when you consider “active” means members who have shopped in the past year, and that the scheme trails Qantas Frequent Flyer and Woolworths’ Everyday Rewards by more than 10 million users, it seems an empty boast.

Apparel Brands has already flagged a revamp of its own loyalty scheme, which it was hoping to launch before the end of the year, and combining its current users with the Myer One database provides a starting point to build from.

While Australians tend to have a wallet, digital or otherwise, packed with a dozen or more loyalty cards, only a few rise to the top in terms of frequency of use, and the translation into profitability.

Qantas has provided something of a master class in how to own this space in recent years — when members can earn points for sleeping, they know they’re on to a good thing.

The Qantas scheme is edging towards becoming akin to the feted “everything app”, which has numerous touchpoints for the consumer: travel, obviously; insurance; credit; but, also areas such as wellbeing, where users can earn points for staying active or even sleeping well.

Each new product line, which brings with it the ability to earn points, builds value for the customer, and, yes, loyalty.

The deal would also allow Myer to step up more of its turnover into the higher value private label market, and give it more bargaining power as Australia’s largest tenant for Australian shopping centre landlords, at least according to E&P analysts.

Originally published as There’s no time for business as usual at Olivia Wirth’s Myer