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Myer and its high-end department stores could be heading for the same dire fate as David Jones, as a retail expert warns the online company’s growing success is ‘cannibalizing’ its classic brick-and-mortar storefronts.
Queensland University of Technology professor Gary Mortimer told Daily Mail Australia that physical department stores had become liabilities for retail giants like Myer and David Jones.
Professor Mortimer, a researcher in retail, retail marketing and consumer behaviour, said luxury department stores “once dominated the capital” because of the vibrant and comprehensive shopping experiences they provided.
However, the rise of sprawling suburban malls like Westfield and Stockland, where customers have a wealth of choices at a cheaper price, as well as the exponential growth of online shopping, have changed the retail landscape.
That culminated in the sale of David Jones, a 184-year-old company, for a paltry $100 million to a private equity firm in Australia on Tuesday after being bought for $2.1 billion in 2014.
Retail expert Professor Gary Mortimer said the growing success of Myer’s online store (pictured) is “cannibalizing” its classic brick-and-mortar storefronts.
Expanding suburban malls and a thriving online sector have changed the retail landscape.
Professor Mortimer claimed that customer service at Myer’s had taken a dive in recent years, saying that he personally found it difficult to find staff to help him shop in the store, a common criticism of the two department stores.
Changes in floor layouts had also caused customers to lose pay points.
“If it’s a high-end luxury experience, a department store will be attractive, but not if it’s a mess and you can’t find staff,” he said.
“Even click-and-collect is hard to find.”
Professor Mortimer said customer service at Myer has sunk in recent years and it was difficult to find staff to help him shop at the store or find where to pay.
Professor Mortimer warned that department stores had become less attractive to wealthy customers because of their discounted high-end designer items.
“Premium customers don’t want that, they want the luxury experience,” he said.
Strong growth in online sales and Myer’s continued success on its website also call into question the viability of its physical stores and Prof Mortimer warns that success was beginning to ‘cannibalise’ that part of the business.
Myer disclosed $49 million in after-tax profit for the 2021/22 fiscal year that ended in June, an increase of 5.7 percent over the prior year.
While sales growth of 12.5 percent was reported during the same period, online sales grew 34 percent.
Professor Mortimer said that although Myer had been able to improve profits, this had required “a lot of effort” and it came at the expense of his storefronts.
‘That is unfortunately where the traditional [retail] the sector is directed,’ he said.
Although Myer had been able to improve profits recently, this had required ‘a lot of effort’ and came at the expense of the continued existence of his physical storefronts.
Billionaire Myer shareholder Solomon Lew scored a big victory in November in his bid for more control in Myer, with one of the directors of his Premier Investments company elected to the department store’s board.
Mr. Lew, through Premier Investments and other related entities, is Myer’s largest shareholder, with a nearly 23 percent stake in the retailer.
Amid speculation at the time over who would buy an embattled David Jones, Myer chairwoman JoAnne Stephenson said buying her rival was not on her “to-do list.”
Mr Lew has been a controversial figure on the Myer board since he increased his involvement, most notably pushing for the ouster of former chairman Garry Hounsell in 2020.
Professor Mortimer said South Africa-based Woolworths Holdings Limited, formerly owned by David Jones, was able to turn the business around in its eight years of ownership, but then decided it was not in its interests to maintain operations and instead “opted for not participating.” of the Australian market.
It has reportedly become increasingly frustrating for Myer customers to find sales assistants to help them when they shop in stores.
The South African company sold David Jones to Sydney-based Anchorage Capital Partners on Monday for a mere fraction of the price it originally paid for him.
Despite the exact figure being confidential, Professor Mortimer said the reported sale amount of between $100 million and $500 million was still a “significant discount” on the $2.1 billion Woolworths spent on acquiring the retailer. in 2014.
Myer told Daily Mail Australia on Tuesday that any suggestion that his business is behind schedule could not be further from the truth.
“Whether in stores or online, our fiscal year 22 results speak for themselves and demonstrate strong growth in both sales and profit,” the company said.
“Similarly, we started the new fiscal year with our best first-quarter sales on record and then followed that up with new in-store and online records in our recent Black Friday sales.
“Our customer satisfaction scores are significantly above pre-COVID levels in stores and online as we continue to drive strong momentum through our Customer First plan.”