Myer used to represent the middle-class aspiration, but it has lost track of its customer base
Myer has a lot of problems because it has tried too hard to please all its customers. Myer has been trying to hold on to the high-end clients of old while also appealing to bargain-conscious customers who only buy on sale.
The place of this product in the market and in the minds of consumers is still unclear. After consecutive write-downs this week, the share prices continue their downward slide and are currently around 54 cents. This is not far from a tenth of its original share value of $4.10. Myer’s board fired its CEO this week, citing the need to take urgent action in order to stop a decline in sales and profits.
Department stores have dominated retail for centuries. In Australia, Myer and David Jones ruled the retail market. Since the 1800s, these stores have connected Australians with the world. They gave Australians a taste for high fashion while exposing them to luxury brands that were not available on Australian soil.
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At their height, department stores focused on the needs and desires of fashionable women. These stores offered female shoppers the freedom to browse and shop safely and decorously, away from home and the company of men. Department stores had a niche, a clear value proposition, and clearly knew who their customers were.
In 2018, department stores such as Myer were no longer the dominant force.
The retail industry has been undergoing a turbulent period in recent decades, thanks to the rise of online shopping, the ability of consumers to compare products on their mobile when they are in-store, weak consumer confidence, and the increase of foreign retailers. The same market conditions are present for all retailers.
Myer’s brand image has slowly been chipped away.
The unique position that a brand occupies within the minds of its target consumers is the essence of any brand. It is a reflection of a unique selling proposal. It defines how the brand will be competitive in the market (including all its subsequent activities, such as product ranges, pricing, marketing communication, desired experience, etc.).
Myer, like many other department stores, was historically a brand of the middle class, situated in a desirable location, and represented the pinnacle for accessible quality in the high street.
Myer has historically been successful because it occupies a unique place in the market, supplying luxury and high-street fashion brands to the middle classes. State Library of South Australia/Flickr CC by
In the past, department stores were able to compete on the basis of quality service and a wide range of brands that appealed primarily to the middle class. They also stood for fashion and quality without being too edgy to alienate the majority. The stores were also a source for aspiration among working-class customers, a place to indulge, shop for special occasions, and peruse to show a sense of achievement.
Myer’s business and identity have suffered due to greater fragmentation of the market and a wide range of needs that need to be addressed.
Myer is being attacked on both the top and the bottom of the market because it lacks clarity about its unique selling proposition. The expansion of entry-level products such as accessories and perfumes, and the extension of French, Italian, and UK luxury brands, means that consumers who want to signal their status can choose from a wide range of options.
Fast fashion brands at the lower end of the market, such as H&M and Zara, are recognizable and have a strong identity. They also know who they’re selling to, which is younger consumers who want to stand out by blending in. Everyone does not love them, and some even dislike them, but that is their strength. Builds loyalty by appealing to a specific set of needs and then executing this position in all that they do.
The failure to reach the target market
Myer’s lack of brand clarity can also be seen in the way it relies on other brands for its sense of coolness or iconicity. In 2015, Myer underwent a transition and shed several long-standing management team members that had transformed the iconic retailer. Myer’s stalwarts, including CFO Mark Ashby and CEO Bernie Brookes, handed over the reins to a younger generation of management, including Richard Umbers and Daniel Bracken. The “New Myer’ strategy was a big success.
The New Myer Strategy focused its efforts on women shoppers, high-profile brand names, better service, and an improved in-store experience, all backed up by a powerful online shopping platform. Investors were asked if they trusted an A$600m plan that included a Topshop deal to save the retailer.
Myer’s share prices were around A$1.26 in August 2015 when the strategy announcement was made. Myer’s ambitions for Topshop in Australia were dashed in 2017 after it acquired a 20% stake. It closed 17 Topshop shops, resulting in a write-off of A$45million. Myer shares closed at a record low of 82c.
It is outdated to use each new season or release as a way to create positive spillovers for the main brand. This approach relegates a brand to a lower status as compared to the means by which it can reinforce its image. Strong brands, on the other hand, use their brand identity to drive all aspects of their business.