In Australia the department store sector has surrendered almost one third of its market share since peaking in the mid 1980’s (Herald Sun November 8, 2011). They are between a rock and hard place, with online and specialty retailers earnestly chipping away at their customer base. For the financial year just past Myer suffered a 5.5% decline in sales and David Jones a 3.2% contraction. Interestingly during the same period many luxury brands reported growth, so it is not all being driven by the new cautionary consumer mindset so prevalent in Australia.
From David Jones we have heard very little about how new CEO Paul Zahra is going to tackle the problem. But in the other camp Myer’s chief executive Bernie Brookes is taking an approach that has some merit. Firstly, Myer is lifting its aspirations in the online space, seeking to generate as much as 10% of its sales revenue online. It has always been such a huge puzzle as to why Myer has been so slow to staking its claim in the online world. If you reflect on one of the advantages Myer has over specialty store online offers, it is its diverse array of brands and product. The fact that it has a wider choice is something they need to leverage. Likewise they have a reputation for accepting product returns with an absolute minimum, a service dimension that they should duly transfer to any online transactions.
But it is Bernie Brooke’s stated approach to customer service that I think has real merit. He is suggesting that Myer will adopt a far more strategic mindset. Myer is going to concentrate on putting additional people in the high traffic areas of its stores eg women’s fashion, shoes, cosmetics – any place where individual attention is needed to convert customer interest into sales. Myer is in a superb position to know where it should place its additional customer service resources, as it over 5 million shoppers with a Myer store card in their hands, and therefore has the richest shopping behaviour data of any retailer in Australia. But it needs to be used intelligently.
Myer will only succeed if it can truly transform its customer service experience into a great one. Being selective about where those more magical personal experiences should play out, is an important enabling step. Myer is beginning move away from a one size fits all and is adopt a more agile and considered brand management approach. The proof will be in the Christmas pudding, but a big tick for intent.