By Jessica Yun
Flashy store displays, on-trend beauty and clothing labels, blow-dry services: these are features that Myer is promising Australians as it plots to turn around its reputation for being a decaying department store that only caters to older shoppers.
In a presentation blitz to investors on Wednesday, the first strategy day Myer has held since 2017, chief executive Olivia Wirth offered a glimpse into the work under way to win over younger customers and position the 125-year-old chain as the go-to retailer for the next generation of shoppers.
Myer is at the beginning of a multi-year transformation journey, said CEO Olivia Wirth.
Wirth, who is nearing the one-year mark in her first CEO job after nearly 15 years at Qantas, used her speech to set the tone for the company’s “transformation journey” for the next three to five years: no looking back.
“We were no longer hitting the mark in a number of product, brand and customer categories, including our exclusive brands,” she said on Wednesday morning.
“It is no exaggeration to suggest Myer’s future would be at risk over the long term if we had continued on the path we were on.
“By knowing our customer we are better placed to meet their needs, and I know that sounds obvious, but it’s not something we have been doing.”
Here are the changes you can expect to see at a Myer department store near you:
Younger shoppers targeted; trendier brands brought in
Myer’s biggest customer base is those 44 to 59 years of age, representing 30 per cent of their shoppers. It is “under-indexed with 31 to 49-year-olds,” and just one in five Myer shoppers are under 30 years old.
This demographic represents a key focus of Myer’s efforts – meaning it has to bring in new customers that haven’t shopped with Myer before.
“Our current brand portfolio attracts an ageing customer group,” said chief merchandise officer Belinda Slifkas.
“[It] doesn’t align with what many of our customers are looking for, especially in fashion and beauty. We’re missing key brands that resonate with a younger and style-conscious shopper.”
Myer’s Bourke Street store in Melbourne: the department store needs to attract younger shoppers.Credit: Eamon Gallagher
We can expect to see trendy brands that are popular online appearing in Myer stores in a few months’ time; seven new clothing and seven new beauty brands are being onboarded, and will start appearing from August, said Wirth.
A strategic review also found more work to be done among Myer’s exclusive brands, which include womenswear labels such as Basque, Blaq, Miss Shop and Urbane. Customers found there was too much duplication between the brands, so Myer will ditch seven private labels and sharpen the “brand and product DNAs” and also lift profits.
Beauty services will be stepped up
Watch out, Mecca. Both David Jones and now Myer are vowing to ramp up beauty services to draw shoppers in.
It’s a key growth category that promises higher sales if tapped into: where Myer’s sales have risen by 2 per cent, the global beauty market has seen growth of 6 per cent.
Beauty halls will be redesigned with “four distinct worlds”, said Slifkas, zones designed to showcase new products and brands. But the one that will catch most people’s attention is the “experience space”, which will include services such as blow-dry bars and nail bars.
“The next generation of customers expect a modern, inclusive engaging in-store experience with team members that reflect lifestyles and interest of those customers – especially in beauty and fashion,” Slifkas said.
Myer store renders. Basque is one of Myer’s exclusive labels.
Store layouts will be overhauled
Myer is rethinking how it uses its floor space and will introduce “curated worlds” designed for the various life stages of a customer.
Instead of sectioning stores according to brands, it means different zones or “worlds” will be set up for different demographics, such as 16 to 30-year-olds who might be “shopping with Mum and Dad” and “for the transition into adulthood”. Other “worlds” will target 31 to 43-year-olds, 44 to 59-year- olds, and those aged 60 or older. Exclusive brands will also be sharpened to fit into the different worlds.
Myer is also going to ramp up its casual clothing offerings, noting that tastes have shifted towards more relaxed, versatile options, which hasn’t been a traditional strength of Myer. Denim will get its own “central hub” that showcases Australian and international brands.
Why is all this necessary? What’s gone wrong at Myer?
The popularity of online shopping, fuelled by COVID lockdowns, has triggered significant changes in the retail industry and intensified competition, and Myer has fallen behind.
Over decades, department stores have fallen out of fashion as people visit standalone brand stores or discover new brands on social media. More recently, cost-of-living pressures also led to a pullback in spending as customers flocked to more affordable options like dupes. Amazon and ultra-cheap retailers Shein and Temu have captured significant market share.
While David Jones has positioned itself as a fashion-forward house of brands, Myer has been perceived as dressing “middle Australia”.
The chain also underwent years of highly publicised board tussles as billionaire rag trader Solomon Lew, a significant shareholder at the time, criticised the board for underperformance and agitated for change.
Lew, the executive chairman of Premier Investments, which runs Smiggle and Peter Alexander, sold his Apparel Brands portfolio (Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti) to Myer late last year in a $950 million deal that Wirth insists are still beloved and says will draw in younger shoppers and expand the Myer One loyalty program.
While Myer’s share price has closed 0.7 per cent lower, the strategy seems to have impressed some investors.
High-profile stockbroker Angus Aitken said the investor day presentation was “one of the best we have watched” and that management had gone from “worst in class to best in class”.
“One of the most common negative pushbacks on Myer from non-believers has been ‘but Olivia Wirth has no pure retail experience’, and we would push back strongly on that,” Aitken wrote in a note to clients.
“We have seen first hand over a long time what she had done in Qantas in a far harder business, with layers of bureaucracy.”
Aitken said he was incredibly confident in backing Wirth, whom he described as a “tier one person”, in the long term.
“If people still think lack of pure retailing experience is an issue today, they dead set have rocks in their head,” he added.
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