Myer admits struggle to meet omni-channel customer expectations

Retail giant sees strong sales growth including online, but net profit is down by 23.1 per cent

Myer’s new CEO has admitted the retailer has struggled to meet the modern and omni-channel expectations of its customers after announcing a 23 per cent drop in net profits in its first half.

According to its half-yearly report to 24 January, Myer saw total sales rise by 1.5 per cent to $1.76 billion, with second quarter sales up 2.5 per cent to $1.07bn. The retailer also posted strong online sales growth, with an operating gross profit up 0.9 per cent to $714.9 million.

However, sales are still below expectations, and EBIDA fell 15.6 per cent to $145.3m. Net profit after tax was also down 23.1 per cent to $62.2 million.

Myer’s new CEO, Richard Umbers, said digitisation had changed the way consumers shop, altering their expectations of retailers significantly. While Myer has been working through a strategic review to better address these modern demands, he conceded the retailer had not yet done enough to meet these higher expectations.

“Some elements of the existing strategy represent solid retail fundamentals. Overall, however, it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers,” Umbers said.

“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.”

Umber said Myer’s new strategy is aimed at bringing “the love of shopping to life” and will be focused on winning back market share, responding faster to change, and delivering a sustainable recovery in earnings.

Key pillars will be customer-driven decision making, building data and digital capability off the back of the Myer One loyalty program to accelerate omni-channel, improving in-store experiences through new ranges and stronger brand emphasis, and improving productivity.

Umbers also said a recent customer research project using internal and external data sources had provided the retailer with much-needed intelligence on the current and future Myer customer, including the merchandise and services it should be placing more emphasis on.

According to the ASX, Myer trading conditions during the second quarter were challenging, only improving in late December. The Stocktake sale was ahead of last year on a total and comparable store sales basis, however this was not sufficient to make up for the shortfall in sales earlier in the half. The highly competitive environment, together with the overall effect of a weaker Australian dollar, saw gross profit margins deteriorate by 24 basis points.

One positive note was the launch of the unique Christmas ‘Giftorium’ concept across all stores, which Myer said helped deliver an enhanced customer experience and generated positive feedback from customers and suppliers.

The company now anticipates operating gross profit margin pressure to continue during the second half of 2015.

CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

​ It’s time to walk the walk and get creative about data

Why do people still treat data and creativity as if they are two separate streams, running in parallel but never quite meeting?

Jason Dooris

CEO and founder, Atomic 212

Tapping behavioural science for consumer influence

We know full well the business we’re in as marketers is really the business of choice. But recent discoveries from behavioural science are leading to a psychological revolution that challenges many of the accepted models of how communication, creativity and advertising influence a consumer’s preferences.

Kyle Ross

Account director, TRP

10 ways of changing your culture through self-awareness

Did you hear about the manager who always shot the messenger whenever they brought bad news? He eventually stopped hearing bad news. Unfortunately for him, this wasn’t because there was none to report.

Steve Glaveski

Co-founder, Collective Campus

There are lots of feature of microsoft dynamics crm by using these features you can grow your businesses. Some of them is lead management...

Dynamics Square

How Port Container Services is finetuning lead management with CRM

Read more

Agreed. I see the opposite problem quite often where people are tasked in an organisation just with "be creative" - thus offering no boun...

Dr Fiona Kerr

The great debate: Is data killing creativity?

Read more

By far, this is the best article I've come across so far that has a relevant information regarding the future of marketing. Although the ...

Jayden Chu

​Six ways to prepare for the future of digital marketing

Read more

These are some good ideas. You didn't touch on the overarching goals and results of brand loyalty. This article does a good job at provid...

hgsupport

Four ways to use social media to boost customer loyalty

Read more

This read like a PR PLUG for the agency. Very flowery language for the agency and very little details about the deal or the project.

Digital_Marketer

Why Tourism Victoria decided to go agile

Read more

Latest Podcast

More podcasts

Sign in