How Would You Make Myer Profitable?

You must have read if not - Myer posts 'disappointing' $486 million loss - article here - http://www.abc.net.au/news/2018-09-12/myer-full-year-results...

Went to the local Myer store to collect a few items bought online and as usual the customer service was atrocious, no one to be seen, finally found someone and he was on the phone for ages while the queue went to 5 people. When asked about a product staff keep pointing to each other instead of taking accountability for it.

The online store is equally bad, half the descriptions are either empty or have half baked information.

So here is the question, if you were made the CEO today for Myer what would be your top 3 strategies to turn it around ?

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Comments

  • +24 votes

    Majorly reduce the size of their brick & mortar stores + focus more on their online business..

    • +4 votes

      Agree, the number of stores with massive sizes would incur heavy rent

      • +1 vote

        Majors actually pay a significantly lower cost for rental space compared to other retailers. According to this article from 2014 Myer and DJ pay $200-250 per sqm whereas other retailers pay up to $6000-8000 per sqm.

        • +130 votes

          Bricks and Mortar stores can't sustainably compete on prices with Online stores. The only way for them to survive is by offering an outstanding experience to consumers.

          The present staffing is woeful. I've actually had items ready to purchase at a register, looked around in circles without seeing any staff, and had to yell, "Is anyone working here?"

          I'd replace the entire floor staff with models from Eastern Europe. Nine females to every male. Male customers spend more in the presence of attractive women to impress. Female customers spend more to compete. And the male staff are needed to lift heavy objects, fix things and draw the lucrative gay market; two incomes, zero dependants and a penchant for fashion are a golden goose.

          A large toy section with plenty of demonstrators and child minding staff would capture parents and proliferate pester power. Mum and Dad could then leave the rug rats and be free to loosen up in the rest of the store. A toy section for adults would be a point of difference amongst department stores.

          Cocktail waitresses should circulate with hors d'oeuvres and suggestively sell drinks. As well as providing a new stream of income, people spend more when they've been lubricated. Speaking of which, perhaps traces of insulin, caffeine and testosterone could be fogged into the air conditioning. Insulin would crash customers' blood sugar, so they'd spend more in the food court. Caffeine to keep them awake and stimulated. And testosterone to boost… "drive".

          If retail therapy is not sufficient to soothe the stresses of the daily grind, or indeed a contributor to them, relaxation massages would be available in the change rooms. Rather than the politically contentious Men's and Women's change rooms, there would be Singles and Couples change rooms. Singles for those looking to meet a friendly stranger (or boring people who just want to try on clothes in private) and Couples for those with life-partners or who've already buddied up amidst the ambiance of the retail experience. Both would be furnished with leather couches, mirrors on all walls and ceilings, essential oils, and a well stocked dispenser of antibacterial wipes. Other accoutrements of hygiene would not be provided in order to grow the customer base of future generations. At larger locations, a Groups change room may be necessary.

          Finally the floor layouts leave a lot of room for improvement. With everyone flocking to the sensational retail experience, traffic flow will require careful consideration. Large entry only doors will be placed on every level. These will delineate the exclusiveness of the retail experience, contain the atmosphere and prevent customers from accidentally wandering outside the store. The scarcely used exit should be placed on the top level, obscured by mirrors and needn't accommodate more than the width of one customer.

          Now let's see Online compete with that!!

        •  

          Mini majors pay about $700-$800 psm and specialty stores pay about $1200-$1600 psm. Not really $6000-$8000 psm when their sales psm is on average around $10k-$11k.

    • +3 votes

      They would be competing in a completely different market and basically lose a lot of their brand advantage. The online competition is also much fiercer and they will be moving from a big fish in the small pond to small fish in the ocean if they move resources online. That said, they can definitely improve their online experience.

    • +4 votes

      fix up their online ordering + stock system
      ordered a bunch of stuff online last clearance and a week later half of my stuff didn't arrive .. "too bad we're out of stock on those, soz"

      • +5 votes

        With Myer's stock system, they actually fulfil from the stores and not a central warehouse, hence the stock inconsistency. With DJs, it's the opposite - warehouse fulfilment first before asking a store that has stock to fulfil.

  • +9 votes

    Some business models are running beyond endgame strategy. The fundamentals of some businesses are aforementioned business models.

    Like the greeting card industry, I think Myers is on its deathbed.

    • +1 vote

      I'm inclined to agree.

      OP, how would you make the Oliver Typewriter Company profitable?

      • +13 votes

        how would you make the Oliver Typewriter Company profitable?

        Mate, that one is easy. Get the product endorsed by tight jeans wearing, man bun sporting, long bearded, flannel clad, braided leather wrist strap, tortoise shell rimmed spectacles… Sit them in a concrete and raw timber themed smash avo cafe with a deconstructed "crushed" avocado fusion breakfast with a cold dripped single origin coffee. Place said typewriter next to subject.

        And for female endorsement… Someone with bewbs.

        Ps. Realised I can summarise the above spiel to three words - social media influenza.

  • +1 vote

    as usual the customer service was atrocious

    I hope whatever you purchased was a good deal because it sounds like there's no reason to go there otherwise.

  • +3 votes

    Oh, I see what you're doing Mr King. Run out of ideas have you? Nice try!

    • +1 vote

      $1.2m-a-year salary (minus bonuses)

      Oh that's right, we can't mention the bonus, that would be outrageous.

      Is it another arrangement where he gets a large bonus even if the business fails again?

      • +4 votes

        This is an oft-said, and oft-mistaken thing. Myer is on its deathbed. You want someone competent to try to save it? You're going to have to sweeten the deal.

      • +6 votes

        The last thing I'd want on my CEO CV is a failed business. So if you want me to join your sinking ship and give it a go you'd need to pay me a pretty damn good salary. At least $80k + super.

  • +16 votes

    You can never find anyone in Myers to assist customers.

    I dont get why they have so many hidden service desk where you can pay, So much wasted labor costs, More POS Systems and extra security. Move the checkouts to the doors and possible close all the other small entry points.

    • +7 votes

      They need the doorway clear so the models from a Robert Palmer video can spray you with noxious fumes as you enter the shop

    • +3 votes

      It's because Myer actually sub-let their floor space to other brands. It's not really one big store. So the person selling you X brand of clothing is actually an employee of that brand and is paid to sell that brand. They only reluctantly sell other things at that register because they have to. It's a case of someone's bright idea to reduce staffing costs impacting customer service.

      https://www.smh.com.au/business/companies/i-don-t-work-for-m...

    • +1 vote

      I find all the staff are in the fragrance/makeup area.

      I was looking at suits for 30 minutes last week during the sale and no one came near me but as usual i had about 4 people ask if i was okay near the perfume.

  • +4 votes

    Charge for entry to the store.

  • +19 votes

    Over the years Myer morphed from being an actual department store to just selling 5 brands of garbage. I'm pretty sure they own the majority of the labels they sell because they don't exist in any other stores. This is especially the case in suburban Myer stores. The quality is bad and the designs are worse.

    At least David Jones is an actual department store still and sells a variety of brands.

  • +2 votes

    Try and keep it going until Christmas, before 'rationalising' the number of physical stores and their locations?

    That is the only time of the year when I physically go shopping in Myer / DJs, and only then for one day to buy a range of gifts for different people. I usually don't have much idea ahead of that visit as to what to get, so I browse and pick up gifts as I see them.

  • +5 votes

    everything comes into place

    debt-laden > credit crunch > retail suffers > job cuts > unemployment rise > delinquency rise > foreclosure rise > recession > depression

  • +10 votes

    Myer is a big box department store, in a world where big box department stores have kind of being out of style for about a decade now.

    Worse, it's a big box department store aimed at the masses, who are price sensitive and every reason to go with lower-overhead sellers like online sellers and smaller discount stores.

    On the other hand, they're so large and mainstream it's impossible for them to compete for the luxury market which are dominated by boutiques.

    What I'd do? Cut down the number of stores to only the bigger, centrally located (and hopefully still profitable) stores in CBDs and very-large urban centers. Position Myer as a large, mainstream, but still upmarket store, worth a trip into the city for.

    • +1 vote

      What, turn it into another David Jones?

      •  

        Can't beat them, join them?

        •  

          Is the market large enough to support the 2 of them though?

          •  

            @mini2: No, but it's the only market that exists for shops of that kind in the current (and foreseeable future) retail environment in Australia.

            It's really: Overtake DJs in the sector or bust.

      • +2 votes

        That's what Myer used to be, before they re-targeted towards the mid range buyer starting in the late 90's (IIRC).

        • +1 vote

          I'm not a mid-range buyer by any means - all my Van Heusen shirts come from the Op Shop… but you have to laugh at a shirt marked down 70% and its still $80

          • +1 vote

            @GaryQ: That's actually part of the problem - I don't think I've ever bought anything at Myer that hasn't been hugely marked down, and that's not hard because there's always a huge range of products with huge mark downs at any one time.

    • +1 vote

      On the contrary, maybe they should service rural Australia, the CBD has plenty of other options as well as online/delivery.

      • +4 votes

        There just isn't the population density in rural centers to support the kinds of huge fixed overhead costs that a big department store incurs though.

        Maybe if they expanded with a chain of smaller, more focused, stores…. named something like "Myer Boutique". Specialising in up-market brands that otherwise wouldn't have a presence in many locations at all, all under one roof, sharing overheads, and selling a limited range to keep even those overheads down.

        That's not a bad idea now that I think about it. You'd have to run the numbers though.

        •  

          My sole example - Myer in Bairnsdale was the place to go for the Boxing Day sales when we were at our holiday house in Lakes Entrance… camping, fishing, doonas.. all marked down

          Myer disappeared the year Aldi / KMart moved in, and is now a Country Target. The shop next door that Target used to live in is now a seconds outlet. Nobody wants to pay full price for quality when there is a plethora of cheap chinese gear on the market

          • +1 vote

            @GaryQ:

            Myer in Bairnsdale was the place to go for the Boxing Day sales

            This kind of just proves the point. A department store has fixed costs all year round. They definitely can't survive on one day of sales, and heavily discounted sales at that, to support them.

  • +6 votes

    Focus on understand their identity and downsize their bricks and mortar to fit that.

    They currently have a large range of products sold in store that are generic like electronics, kitchenware, toys etc with prices are not typically value unless they are on sale. People don't need to pick these up and see/feel them to enable a purchase, so move them to online only.

    Focus on the items that best promote impulse buying like clothes and perfume, downsize the store and focus on customer service. Make it a destination store for a premium experience rather than a one stop shop that fails to be remarkable at anything.

  • +6 votes

    I think they’re confused about what/who they are.
    They want to position themselves as a luxury or upper class brand, however this image is diluted every time they have a sale. People aren’t buying unless there is a sale and as they have them so regularly they don’t have to wait long.

    People are expecting the luxury brand experience but only willing to shop when stuff is on sale. The customer wants the best of both worlds.. the Target or Kmart prices at a high street store experience. Myer will never keep up with expectations if they try to do both. Certainly isn’t a profitable strategy.

    • +1 vote

      Even with their luxury brands everythings locked up with their security alarm and sometimes theres even more then one! Even the lego is locked up…

      The other day i went to get some clothes and they made me feel like a theif. Every piece of clothing had the ink tag and they were following me around. Just over the top. Wont be shopping there again.

  • +3 votes

    Raise prices.

    Dopey cashed up bogans who think price is the best measure of quality were always the target market anyways…

    • +4 votes

      But they sell THE SAME products as everywhere else! Almost all the products they sell, in Chadstone for example, can be bought outside the store for cheaper. Watches, electronics, clothing, makeup - they barely sell anything unique. Higher prices is their only difference at the moment.

  •  

    They definitely need to get into the luxury market & increase the amount of services instore.

  • +5 votes

    They really need to clear as much of their old stock as they can.
    Then they need to shift into a 'store' that is based on renting out concessions to brands that match their vision of where they want to position the store.
    HN is just a furniture store, a bedding store, an electronics store and a computer store under the same roof.
    Myer could easily decide the position they want as a 'mid to lux' retailer, and just provide space for those brands.

    •  

      Renting the areas as concessions seems to be a good idea to me. There are lots of items that people want to hold and interact with before they buy, but they don't necessarily want to pay the marked up price at the local retailers.

    • +1 vote

      That's what they did several years ago. But it failed big time and they're backing away from it. Apparently having a chunk of your staff only willing to help customers with their specific area isn't great for the customer experience.

  •  

    I don't see Myer suriving in the long term - it is an old style business which still has massive overheads and bad customer service in store. I for one wouldn't miss them if they shut down today - haven't shopped there in years.

    • +18 votes

      If you haven't shopped there in years, how can you give a review on their service level in store?

      •  

        That is true - I am making the assumption that their stores are still massive floor spaces with little staff to be found. Well done to them if that has changed - however it doesn't seem to be translating through to financial results.

      • +3 votes

        Typical of the average punter, everyone has the answer, and thinks what needs to be done is obvious.

      •  

        It has and always will be bad

  • +18 votes

    Look at their electronics sections - dark and cheap looking areas with old outdated stock sold at premium prices

  • +9 votes

    They must have a huge warehousing and fulfilment capability. They could invert their business model and follow Amazon by going online first. Downsize their stores to be purely showrooms. Go in and try something on for size but then purchase online.

    •  

      They need to improve their click and collect facility. I spent 20 minutes trying to get a staff member to help me pick up an order while the store was dead quiet and there was plenty of staff around ignoring me. Unfortunately, their warehousing seems to be 'pick things up off the shop floor', which seems to result in a lot of canceled and partially fulfilled orders when they can't find the item on the floor.

  • +1 vote

    At least they could partner with Amazon.au and provide pickup and maybe display.

  •  

    Service levels are shocking - they drive people away. Witnessed this 1st hand and experienced it as well

  • +1 vote

    Didn't Myer already try to restructure ?. Whoever designed their online platform didn't make it very user friendly.

  •  

    Sell off whatever you can. Put the money in the bank. Earn interest.

    Seriously, the joint is horrendous on just about every level. The competitive advantage department stores used to have has completely disappeared and the business model has practically become a source of competitive disadvantage.

    The landscape has become overly crowded. Myer is now effectively bracketed with David Jones, Target, Big W and Kmart. Myer is just getting squeezed in the middle and I can't see how all five can survive long run.

  • +6 votes
    1. Cut any non profitable stores today.

    2. Get some decent analytics happening in store on where people are going, what items are selling, what items are loss leaders that then bring in other sales and which are just losers?

    3. Streamline the stores and staff. Lots of wasted space with the multiple checkouts and crap. Instead of these staff having to deal with running a til have them full time doing their actual job of customer service.

    4. Test your customer service staff - if someone is in the "kitchenware" area test them, make sure they are an expert on it. Got someone in the Mens Suits? Make sure they know what they are on about. Get some undercover testing in the stores happening.

    5. Stop this "fulfilling" at the store level BS. There is no way you can think about this and think it could work vs. a single or couple of warehouses.

    6. Cut down the online presence, don't promise the world online of having every product as in store - make clear the "in store experience" is the better one. Cut down the online range to simplify the warehouse side. BUT make sure the link is there to view in store stock properly and make sure this works 100%.

    Everyone saying they should go throw everything at online is in an online dream. Current is like 7% split of retail sales as online.. Its growing but its not a freight train, still the other 93% to chase..

    •  

      Yeah, things you can try on in store but only get from Myer are potentially good revenue. Things like beds where they have their own version, fashion etc. Being a showroom for things you can buy from anywhere, often sight unseen (eg electronics) seems to be a bit of a failing idea.

      That said it would be handy to be able to try some things on for size and get a different colour online from their warehouse, since it's often hard to find things in the right size + colour in their stores. Particularly during / after a sale. And keeping all that stock on hand in every store seems to be a good way to lose money when seasons change and they need to clear it all.

  • +1 vote

    Don't know if they do this already but sublet parts of the store to smaller retailers.

    This way you get to charge fixed fee plus commission of each sale and you do not need to deal with stock and warehousing. And you'd reduce the staff levels as well.

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