Me oh Myer - what a decision

Myer is at a crossroads, so where to next for Australia's largest department store chain? Belinda Smart investigates.

For the head of a department store whose future appears to hang in the balance, Myer managing director Dawn Robertson is decidedly upbeat.
"I'm really excited about what's happening at Myer, as are my team. In my view this is all about re-energising Myer," she stated.
She is referring of course, to the announcement last month (August) that the Coles Myer Group had decided to put an end to years of speculation over the oft-repeated question; "What will happen to Myer?" by implementing a review of the department store's ownership.
Announcing the decision to media recently, Coles Myer CEO John Fletcher confirmed directors would consider three options: a trade sale, a demerger to existing shareholders or retention of the chain as a component of the group.
No end-date has been set for the review, but commentators believe if sold the department store's price tag would total around $500 million.
While detractors may interpret the ownership review as proof of Myer's status as the black sheep of the Coles Myer family, Robertson is steadfast in her optimism.
"Myer isn't struggling at all. This year we ended with $72 million dollars EBIT (earnings before income tax) compared with a $25 million debt a few years back."
Certainly she has supporters. Melbourne accessories wholesaler Fun Fashion Accessories supplies Myer with a broad range of branded accessories including US brands Kenneth Cole, Liz Claiborne and Monet. Its managing director, Stephen Stanford, believes Myer is in a much better place than it was before Robertson joined the group in 2002.
"I think Dawn Robertson has been doing good work. She has a very good eye and the stores are starting to look good," Standford said.
There is still a way to go however. Having lurched uncomfortably from department store to discount specialist and back again over the past decade and now pursuing its "house of brands" strategy, Myer is still in a period of transition.
The ownership review is the starting point of a five-year strategy, that Robertson claims see the store grow top line profit and continue to focus on its core fashion offering.
"This includes womenswear, soft home - which we see as an extension of fashion - and an enhanced youth product mix," she said, adding: "Myer is intensely focused on youth fashion and on servicing the youth market better."
While it is too early to divulge the details of the chain's youth strategy, a radical overhaul of store fit-out and in-store experience is likely.
"It's about providing compelling product assortments and generating excitement about the instore experience," Robertson said.
Commentators have indicated that the Myer in-store experience is lacklustre. The store has been compared unfavourably with international models such as UK department store Selfridges, but Robertson believes Myer must blaze its own trail.
"Many people tout [UK department store] Selfridges as the ideal model but you have to remember that Selfridges only has one or two outlets whereas Myer serves all of Australia," she added.
"Yes we do look at international models for inspiration, but there is no one single retail model we would follow. We might take good elements from a number of stores.
"For example we've revamped the intimate apparel offer at a number of our stores - including the recently refurbished Brisbane store - and we took of our inspiration from the intimate apparel offering at [Paris department store] Galeries Lafayette."
In addition to enhancing product mix and instore experience, the next five years will see the implementation of updated point of sale technology and improvements to the store's supply chain and speed to market.
In the mean time its "business as usual" Robertson stated.
"We've talked to both staff and suppliers and they are happy with the ownership review."
Womenswear retail label Feathers, which has two Myer concession areas in Melbourne and one in Sydney, is one such supplier.
Feathers owner and founder Margaret Porritt does not subscribe to the commonly held view that Myer has fallen victim to the obsolescence of the department store model. "Australian department stores were in a real rut about 10 years ago and they've come along way since. People talk about how department stores are dead but there is still definitely a department store consumer out there."
"It would be great if a really progressive retailer came on board that was more in synch with Myer."
Rod Leavis, CEO of Sydney fashion chain Cue, agreed.
"We've always believed the department store being aligned to a discount department store group is probably not a good fit and we'd be quite happy to see them split."
Whatever the outcome of the review Myer still needs to find a way to ward off competition from specialty retailers; and in its mission to "serve all Australia".
There is a fine line between providing enough innovative high-end fashion to keep stores exciting and serving loyal customers who want value and quality.
An additional challenge is re-educating customers away from the notion that department stores are about discounting, Robertson conceded.
"That is a work in progress and it's about bringing pricing back to sane levels. We're not there yet but I think customer perception has got better. Having said that, we are a promotional department store and we're not ashamed of it. Yes we go on sale, but our mission is not about discounting, it's about great quality for affordable prices."
Robertson sees the review as a chance to end speculation and allow the mission a clear path.
"This is not about restructuring Myer or laying people off. Of course I can't give anyone a guarantee that Myer will never ever sell off any more of its stores, but that is not what this is about. We need to get the issue of ownership settled."
While she refused to speculate on the merits of any of the three possible outcomes, Fun Accessories' Stephen Stanford is less reticent.
"I think it would be a shame to sell Myer now; it's in a process of change and is only just beginning to reap the rewards of the work that has been put into it."
"I reckon $500 million is pretty cheap for Myer. If I had the money I'd buy it because in a few years' time you would get twice that amount for it."