Olivia Wirth’s big plans for Myer take shape

Former Qantas executive Olivia Wirth has moved at lightning speed in her first 100 days in charge of the retailer. This is where she wants to take it.

Myer executive chairman Olivia Wirth at the Sydney store. Picture: John Feder

For Olivia Wirth there’s a surprising number of similarities between airlines and big retail.

The career Qantas executive is now firmly in charge of the 124-year-old Myer, after moving into the executive chair role in March.

In June she assumed full chief executive responsibilities – taking over from John King who spent the past six years tackling costs, fixing the balance sheet and repositioning the retailer after a string of management missteps.

“While the product might be different, there’s actually quite a few similarities behind the scenes,” Wirth tells The Weekend Australian.

There’s the need to invest for growth, the orientation around loyalty, and demands on of being able to focus on the day-to-day trade while also focusing on the long term.

“If you think about the orientation around customer, you’ve got the day-to-day rhythm of the operation. You’ve got a significant e-commerce and online business.
“You’ve got a massive data asset that you try to make sure that you understand what the customer needs are.”

SYDNEY, AUSTRALIA - NewsWire Photos MAY 10 2024. GENERIC. Shoppers walk past the entrance to the Myer department store in Pitt St Mall. Economy, cost of living, budget, shopping, retail. Picture: NCA NewsWire / Max Mason-Hubers

Behind all that is a need to work on protecting and growing slender profit margins.

She was speaking as she unveiled the retailer’s full-year earnings, which showed top-line profit down 28 per cent to $43.5m on a series of writedowns and discounting. However top-line sales were up 0.4 per cent for the year in a tough consumer market and up 0.8 per cent in the second half.

In her first 100 days Wirth has been moving at lighting speed. She has commissioned a major business-wide review, made a takeover approach, and reversed a sales process Myer had under way on a collection of private brands including Sass & Bide.

But it’s the strategic review – dubbed Myer Tomorrow – that has come into most focus.

Here everything is under the microscope: the customer base, product offering, store network, e-commerce, supply chain and costs.

At the heart of it is Myer’s secret weapon – the MyerOne loyalty scheme which has more than 10 million members. The program is one of the biggest in Australia and boasts the highest tag rates, or usage rates, of any retail program.

The top-level aim of the review is to set Myer up for the next five to seven years by driving a step change in Myer’s market position. It intends to use every possible lever of the Myer business.

Importantly, and unlike early last decade where Myer was on a path to fade away, the review comes from a position of relative stability.

“That stability means we can now turn our minds about what the next phase looks like for Myer,” Wirth says.

The business of retail is rapidly changing both here and globally where traditional department stores have lost their command and need reshape their proposition. But that also means there’s opportunity, she says.

“It’s really about turning our mind to what does Myer become in five to seven years’ time, and how do we participate in the growth in different verticals, and what are the best assets that Myer has, and where should we invest to ensure that we can tap into that growth?” Wirth says.

The full review being conducted by management consultants BCG is scheduled to be finalised by the end of the year.

Wirth says the early insights so far confirm Myer has the potential to build on its stronghold positions in beauty, make-up, as well as men’s and women’s fashion.

Myer also has the “right to win” in other categories like homewares.

She says the retailer needs to move away from the cycle of discounting while capturing younger customers. Fundamentally, Myer will need to build and investment in MyerOne and while driving more gains from e-commerce over time.

Loyalty is “the core differentiator” for Myer over competitors, Wirth says.

And given her past experience running the massive Qantas Frequent Flyer program, Wirth knows the power of data in being able to keep people coming back as guide the offering.

“It’s not just about reward, it is also the insights that really help you understand what the customer wants,” she says.

Myer will play to its strengths in fashion and make-up. Picture: Aaron Francis

Elsewhere, the review has so far resulted in a decision to retain private label brands Sass & Bide, Marcs and David Lawrence. As part of this, around a dozen Sass & Bide stores will be shut with the brand moving back into Myer.

However the big unknown for many is how Myer will look in the future.

She’s made a takeover approach of the domestic brands business of Myer’s biggest shareholder, billionaire retailer Solomon Lew.

Such a deal could significantly reshape the earnings profile by delivering hundreds of smaller retail stores to Myer and move it into proprietary retail such as Just Jeans and Dotti. The savings through combining supply chain and warehousing represents the opportunity as well as diversifying revenue. Due diligence is underway on the combination of the two and given the cross-shareholding arrangement with Lew’s Premier Investments, independent shareholders will have to be satisfied the combination represents the best fit.

Wirth can’t comment on the process other to say there is “significant opportunity” in the potential transaction.

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Originally published as Olivia Wirth’s big plans for Myer take shape