Monday, September 29, 2014
What does loyalty mean to Myer?
I strongly believe that if there is to be any damage caused to Hobart City Council’s reputation from what our Annual Report reveals, it will be as nothing to Myer’s reputation and customer loyalty if it should decide Hobart is only worth investing in as either an online retail facility or their new FFS model (see below).
Council has bent over backwards to get Myer back into the CBD given the threat of a new floor being built at Eastlands to house them or Myer moving out of the CBD for good.
Council responded to enormous trader and public pressure at the time, and whatever arrangements were made, consider that the assistance package was agreed to in the economic environment of the day with the best of legal and economic advice. The delays in building were not the fault of Council – the Aldermen and staff bent over backwards to get this store built - whatever delays occurred they can be sheeted home to the various business owners of the site.
Times have changed. As has retail with the rise in the last 5 years of serious e-retailing (even Myer is now in on the act). It is now more profitable for Myer to operate off-line rather than through a brick and mortar site and to change around how it does retail, away from flagship stores to FSS (free standing stores).
It is public knowledge and well reported in the financial pages that Myer has been in difficulties, that it has been roundly slapped down over its bid for David Jones, and it has announced the closure of a number of retail outlets and stopped the upgrade of others. It was expecting to have 80 stores opened by 2013 and now has only 67. Its latest annual reporting bears out a contraction in regional areas and a delay by yet another year of the opening of the Hobart store.
Further, the financial press reports that Bernie Brooks and two other Directors have started a FSS process with Myer, so a layperson can only conclude that Myer aims to change how they do retail around Australia in the best interest of their shareholders.
The financial pages report that FSS Retail is potentially being positioned to help Myer expand from its network of 67 department stores around the country by building free-standing stores that might be placed within shopping centres or along suburban retail strips. Last financial year Myer's exclusive brands grew its sales by $40 million and now account for 20 per cent of the department store's $3.1 billion in annual sales.
The retailer has set itself a target of 1 per cent growth in its Myer exclusive brand category over the next few years and the bulk of that is expected to come from acquiring new fashion labels that bring with them a portfolio of free-standing bricks-and-mortar stores. (Source: http://www.smh.com.au/business/myer-move-to-extend-its-retail-options-with-fss-retail-20140302-33tyb.html#ixzz3BZYlj6XJ )
We can all be wise after the event. Even the experts that advised Hobart’s Aldermen could not foresee the change in Myer’s fortunes.
Authorised by Eva Ruzicka, 10 Congress Street, South Hobart