Myer chief executive officer Richard Umbers has revealed the challenges ahead for the department store at an investor briefing.
The newly appointed chief spoke to media and investors at the Myer 1H Results briefing this week.
He said the department store will continue to undertake a thorough review of its strategy to better meet the new retail environment.
"We acknowledge that in recent years, cost growth has outpaced sales growth, and profits have declined.
"At a macro level, the challenges are well known, particularly the globalisation of retail which has brought new competitors to our shores.
"Digitisation has both empowered the consumer and created new channels to market.
"Customers have changed the way they shop and their expectations of retailers have changed significantly.
"Some elements of the existing strategy represent solid retail fundamentals.
"However, overall it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers.
"There is strong evidence that department stores can transform and be inspirational to customers.
"Our international peers have responded to disruption by leading in omni-channel, by reinventing the in-store experience, overhauling the range, and by differentiating through innovation.
"Our new strategy to bring the love of shopping to life will be guided by a clear vision and a plan to win back market share, to respond faster to change and deliver a sustainable recovery in earnings.
"An extensive customer research project using internal and external data sources has delivered a detailed analysis of the current and future Myer customer, and the merchandise and services they want to enrich their lifestyle," he said.
The enablers of the new strategy include:
• Customer driven decision making – all decisions will be guided using a targeted approach to the current and future customers
• Merchandise assortment and in-store services – transform ranging, strong brand emphasis, space allocation and in-store experience
• Data and digital – accelerate omni-channel and leverage the MYER one program
• Asset and cost productivity – maximise productivity from all assets to increase returns
"All our efforts will be underpinned by strong execution and organisational capability," Umbers said.
"Creation of shareholder value is our key priority and rigorous return on investment hurdles will be enforced.
"Over time we will create an operational model that is better leveraged to reward shareholders for growth.
"The management team has a valuable mix of new and established leadership that is energised and determined to repostition the new Myer as a modern, inspiring department store.
"We are confident that there is a significant opportunity available to the business in a changing retail landscape. We look forward to sharing more details on our strategic review later in the year."