The seven things new Myer boss John King needs do to save the iconic retailer
THESE are challenging times at Myer as it parachutes in another British CEO, on a whopping $1 million plus annual pay packet.
THE poisoned chalice of Australian retail, the chief executive position at ailing department store Myer, has been filled.
But the new British boss will have to work fast to convince customers and shareholders he can save the 120-year-old store from the bargain bin.
Retail gurus news.com.au has spoken to have proffered a to-do list of immediate actions Mr King must tackle to arrest Myer’s malaise — from culling stores and putting more staff on the shopfloor to giving people a reason to once again come and shop.
On Monday, Myer announced retail veteran John King will take the helm at the Melbourne-based department store pocketing a $1.2m-a-year salary, minus bonuses — that is once his visa clears.
When it does, he will certainly have a job on his hands. Last month the chain announced it lost half a billion dollars in just six months.
Its share price of 38 cents is less than one-tenth of what investors paid when the store floated in 2009. Earlier this year it turfed its previous, also British, CEO out the door; and rumours continue to swirl that David Jones has its eye on snapping up Myer and taking out its nearest competitor.
Turning Myer around won’t be easy, or cheap, said consultant Brian Walker from Retail Doctor Group.
“Myer has been in a trading decline for 20 years, so to expect someone to turn that around overnight in a climate of online shopping and globalisation would be asking for Hercules. No one man can stop that tide.”
Mr King was at the helm of the UK’s House of Fraser department store group until 2014. Founded in Glasgow in 1849, it occupies a middle to upper market space similar to Myer.
Under his watch, House of Fraser’s profits soared to ₤430 million ($A788 million) by focusing on exclusive up-market labels, online and snazzy looking stores.
Pippa Kulmar, a strategist with Retail Oasis, said it was no surprise Mr King was chosen.
“They’re looking for credibility and to re-establish their seriousness as a retailer and therefore drawing someone in from a bigger market is a tried and true strategy.”
So what should Mr King be looking to do on day one at Myer’s Docklands HQ?
1. THINK LIKE FOUNDER SIDNEY MYER
Born Simcha, and hailing from what is now Belarus, Mr Myer opened his first store in Bendigo in 1899 and started a retail revolution.
“If you go back to Sidney Myer, his whole vision was to be a step ahead of the customer,” said Ms Kulmar who bemoaned the slavish adherence to data at the expense of going with your gut.
“You need a really innate understanding of the current and future consumer, to know what’s right and wrong before the customer knows. It requires intuitive skills and that’s the magic of fashion.”
2. SLIM DOWN AND SHUT DOWN STORES
House of Fraser has less than 60 stores for 60 million Brits, Myer has 62 stores for 25 million Australians. And the cost of renting all that floor space is crippling the company with estimated lease liabilities of $2 billion.
“One of the first steps is to get out of underperforming sites and wear the pain of some store closures,” Mr Walker said.
“There’s no doubt if they want to be successful they will have to cull stores. The big question is where you need bricks and mortar stores and where you don’t,” Ms Kulmar said.
Myer needed to work out what its stores were for, she said. Were they flagships to showcase the brand? Tourist attractions in major centres? Or a way to dazzle new customers? While the big CBD stores in Melbourne and Sydney were safe, smaller regional and suburban branches could be in danger.
3. MORE STAFF ON THE SHOP FLOOR
“The overwhelming criticism of Myer from customers is that they can’t find any staff,” said Mr Walker.
“The board are going to have to take a punt on this and put more people working in stores.”
4. WORK OUT WHO THE SHOPPER IS
Under previous CEO Richard Umbers the company had been enacting its “New Myer” strategy of targeting higher income customers. But since he left, Myer has been cutting prices to bring more people into stores.
But Ms Kulmar said trying to be both high end and mainstream was not an option.
“There are no successful mid-market department stores. You have to go up or down; you don’t want to be stuck in the middle.
“We have too many discount department stores and David Jones is pushing up so (Myer) have to go up.”
She said the high growth was in fashion.
5. INVEST IN EXCLUSIVE BRANDS
Mr Walker said people needed a reason to shop at Myer and nowhere else: “They can’t be mass merchandisers, they have to be unique merchandisers and bring exclusivity either through imported brands or home brands that people can only go to Myer for.”
6. CONTINUE MARCH TO ONLINE
It’s almost a cliche, but few retailers can survive without a solid online presence. And not just a website, a full omni-channel offers including click and collect.
“The consumer wants frictionless shopping,” Ms Kulmar said.
7. HAVE THE COURAGE TO MAKE DIFFICULT DECISIONS
Big retailers were too often hamstrung by internal push-back on grand plans, said Ms Kulmar, which saw them lose sight of the most important people — customers.
“The problem with the New Myer strategy was that it wasn’t enabled by the culture. You have to move quickly, you need courage for transformation and you can’t do it piecemeal. It’s not about hoping not to annoy everyone, it’s about taking a stand.”
Mr Walker agreed, saying the new boss would be under pressure to set out his path to profitability quickly.
“Mr King has to be allowed time to build a strategy that will win support of shareholders, investors and customers — and time is the very thing he doesn’t have.
“There has to be long pockets to support (the strategy) otherwise the future for Myer could be that it’s acquired by another retailer.”
But both said Myer had much in its favour, including a popular loyalty program, enviable store sites and a brand to die for.
“It’s a huge challenge but what (the new boss) has on his side, is that in the heart of Australians there is a real affinity for Myer. We want it to succeed — it’s an icon,” Ms Kulmar said.
“There is a real want for them to do well, but they have to meet the customer halfway and give them what they want.”
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