Olivia Wirth unveils strategy to revitalise Myer

Nail bars, blow-dry services and a refreshed loyalty scheme will turn Myer into a retail champion, Olivia Wirth vows.

Myer executive chairman Olivia Wirth in the Sydney city store at the Myer strategy day on Wednesday. Picture: Jeremy Piper

Myer executive chair Olivia Wirth has unveiled her highly anticipated refresh for the grande dame of Australian retail, including plans to entice younger shoppers with a reimagined cosmetics floor replete with nail and blow-dry bars.

She also plans a significant overhaul of the retailer’s loyalty program.

Launching Myer’s first strategy redo in almost 10 years, Ms Wirth touched on every facet of the company’s operations — from supply chain and IT to mobile apps, brands and customer experience — to promise sceptical investors who have been promised better times before (only to be disappointed) this time it was different.

“Our ambition is for Myer Group to become a retail engine that is unmatched in Australia,” she proclaimed at the start of her introduction on Wednesday as she also conceded mistakes had been made in the past, and set out remedies to set things right.

“It was clear to us that we were no longer hitting the mark in a number of product, brand and customer categories, including our exclusive brands.

“The strategic review made it clear that we need to make substantial changes to the business. The retail landscape is moving rapidly, and so must we. Standing still is not an option. 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.”

A reimagined Myer store entrance.

This makeover of the 125-year-old Myer would be helped by the recent acquisition of the apparel brands business from Solomon Lew’s Premier Investments with the inclusion, for the first time under the Myer roof, of brands such as Just Jeans and Portmans.

Its Myer One loyalty scheme would be extended to these new brands, boosting “cross-shopping” opportunities, while new loyalty tiers would be introduced, and from 2027 points will be able to be redeemed outside of the Myer Group.

In a five-hour presentation flanked by new executives hired specifically to revitalise and restructure Myer, Ms Wirth also outlined a potentially lucrative new play for younger shoppers who were bypassing the department store, especially when it came to the key categories of make-up, cosmetics and beauty.

Spearheading this new push to younger demographics would be reimagined “worlds” within Myer’s cosmetics floor — which Ms Wirth termed the “windows to Myer” — and would feature special zones such as “Gen Z worlds” as well as new spaces for experiences such as nail bars and blow-dry bars.

Myer would dedicate greater floor space to traditional and innovative beauty experiences, helped by co-investments from landlords and brand partners, as it tries to wrestle young shoppers — especially Gen Z and Gen A — back from newer retailers such as Mecca and Sephora, which are proving a hit with younger women. “Frankly, we need to do better, much better,” Ms Wirth said.

“There is a genuine opportunity, particularly in the under 30s and in the high-spending 31 to 42-year-olds.”

Elsewhere, Myer would review its portfolio of private label or “Myer exclusive brands” with the aim to drop seven to improve its fashion and apparel credentials, while it was also working on a 'shoppable' mobile app to be released in August or September.

However, Ms Wirth said while there were some levers her management team could pull now to generate immediate change to Myer and its apparel brand businesses, other strategies would take years to implement. But, it would be worth it to investors.

“We do believe there are quick wins … resetting the product offering takes time but we have been fast out of the gates (and) new stock hits the stores in February,” she said.

“It is a three to five-year journey and this year is a transitional year. We are going to take a very methodical approach to this and going to start with one store. We’re going to see how that works, we’re going to test and learn.

“(There is) no shortcut in product, no shortcut in brand, no shortcut in (customer) experience, the customer ultimately decides. There is a lot of competition out there, a lot, and we have to make sure our brands, our product are wanted. We will be methodical, clear on priorities and where to invest across the board to bring in value.”

And while the presentation was not heavy with financial targets, she did promise Myer would aim to be a top quartile Australian retail performer in terms of total shareholder return.

The strategy day gained immediate plaudits from one of the toughest analysts in the sector, Bank of America analyst David Errington, who called the presentation and ambitions of Ms Wirth “absolutely spot on”.

He did sound a note of caution, saying the transition to the new Myer Ms Wirth was trying to fashion would take more than 12 months.

“(It is a) great project and all power for doing it, but for shareholders the thinking is the transition … it will take a bit more than 12 months,” he said.

Mr Errington also dismissed the attempts by previous Myer management to grow the business after decades of stagnation.

“The execution to date has been appalling. Absolutely dreadful,” he said.

It was a sentiment shared by Myer bull and investor Angus Aitken of Aitken Mount Capital Partners.

“I cannot think of another business doing circa $4bn of sales that has been more poorly run over 20 years than Myer,” Mr Aitken said. “The previous people running this company have been total and complete battlers.”

Mr Aitken, whose share price target for Myer is as high as $5 compared to its current price of about 70c, said Ms Wirth’s presentation and strategy day was one of the best he had ever seen.

“This is a person who knows how to grow businesses. There is a total mindset change in Myer. They now think and act as owners, which was never the case in the last 20 years.”

Myer shares ended slightly weaker at 72c.