Myer is in the midst of undertaking the “biggest brand overhaul” in its history, kicking off at the end of 2015 by bringing Topshop in store as part of a $600 million revival.
Speaking at the Ragtrader Live event, Designed to Disrupt, Myer chief of merchandise and customer officer and deputy CEO Daniel Bracken spoke on the “New Myer” strategy and its transformational journey.
Bracken said the previous Myer approach focused primarily on expansion, however that has now changed to focus on a more speciality offering to align with the evolution of the retail landscape.
“We wanted more space, we wanted more stores and to appeal to every customer in the country in every category. We wanted to play wide and in a lot of fields,” Bracken said.
While Bracken believes this was a solid strategy 10 years ago, a lot has changed in the market with the globalisation of the fashion industry, the rise of digital and changes in traditional demographics.
These trends were a driving force to the implementation of New Myer, says Bracken.
Last year, Myer reported a net profit of $77.5 million, down 21.3% from last year – another reason for the need of a strategy overhaul.
Bracken said the focus is now on serving a valuable customer, which it has identified through data segmentation, and providing a more experiential, personalised interaction for the customer, whether that be online or in-store.
Understanding the customer
“When you have a loyalty program of five million members, you can’t blame management for thinking they know all about their customer – but actually all they knew was what they were doing inside Myer,” Bracken said.
The retailer partnered with Retail Oasis and Roy Morgan to analyse the behaviours of customers both inside and outside Myer.
Through the data analysis, Myer was able to capture a profile of the three most important customers to its brand – led by its model customer, who they call Eva – a professional woman aged 30 to 45 who has a family and a good income, but not a lot of time.
“Finding out that Eva liked to shop in department stores was incredibly useful for us. We also found out she is worth $13 billion of a $60 billion market and we have 7% of her wallet. So we are winning with Eva,” Bracken said.
The other customer pillars identified were ‘fashion forward’ and ‘affordable fashion’.
Bracken said the decision was made to refocus the retail offer to attract more of the customers who represented the highest value to the business and thus return Myer to a sustainable profit growth.
Another focus of Bracken's has been on creating “dwell spaces”, which led the decision to invest more in Myer's food and beverage offering, its fitting rooms and its bathrooms.
Myer is focusing on high profile brands and will reduce its store network by up to 20% to focus on its flagship stores as part of its productivity step change strategy.
“20% of our stores did not match the New Myer strategy,” Bracken said.
This led to the decision to close four stores, including its Top Ryde City store in Sydney and it will close its Brisbane’s Brookside shopping centre store in January 2017.
“It absolutely has been the biggest brand overhaul in the history of Myer,” he said.
He says Myer has rolled out close to 1000 new installations since August 2015, including Seed, Nine West, Topshop, Mimco and French Connection.
“If you go into our stores, they are starting to look and feel very different because of the new offer and new environment,” he said.
Bracken said the move to introduce Topshop to stores was made to leverage a younger demographic and is part of changing the perception of the retailer.
And so far its working, with the launch of Topshop and Topman creating a "halo effect" to other brands, helping the retailer increase sales by 1.8% to $1.79 billion in the first half of fiscal 2016.
“We used to have a very generic way to how we rolled out new brands in our store, whereas now we want the brand to sit as it would in its own store within Myer.”
From the $600 million dedicated to the transformation of Myer as a brand, $100 million was allocated to improving its online retail experience.
“It wasn't that long ago we were lambasted for having a terrible online experience and now we are winning awards for it,” Bracken said referring to Myer's win of the Roy Morgan Satisfaction Awards in 2016.
With the Warringah store set to reopen in the next coming months, Bracken says expect to see a very different store.
“The concept of the store is completely different – the fit out, the atmosphere, the staffing model – this will be the first whole embodiment of New Myer,” he said.
In the store, there will be opportunities for local businesses to open a food or drink venture or a pop-up shop and brands like Apple in-store.
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